The bulls refused to back off on Friday. Once again all three major indices gapped higher. It was an indecisive day after the gap, but still, the SPY gained 0.37%, the DIA gained 0.12% and the QQQ gained 0.49%. All three closes were at the all-time high. The VXX remains historically low at 13.32 and the T2122 remains in overbought territory but did back off slightly to 82.99.
In economic news Friday, the Treasury Department had to bring back the 20year bond (last issued in 1986) to help cover the ballooning budget deficit costs. This had the short-term effect of steepening the yield curve. In addition, Bloomberg reported that Larry Kudlow reports that the Trump Administration will seek to scrap a 1977 law that prohibits US companies from bribing foreign governments. This issue was reported to have been a point of contention between the President and his previous Secretary of State.
Among stocks, BA took a hit when a new software problem for the 737 Max was announced. In addition, JBHT took a major hit on their earnings miss.
There is no major economic news Tuesday following the holiday, but the President is in Davos and is telling other countries to follow his protectionist path of "Insert Country Here First" approach. That itself is a first, coming from the leader of the country that led the free-trade and global market movements. In non-economic news, the Presidential impeachment trial begins today. In the market, there will be a number of earnings reports. Among those reporting before the open are CMA, HAL, HBI, NUE, PGR, and ROL. After Tuesday’s close IBM, ITW, NFLX, UAL, and VFC will report.
Overnight, Asian markets were strongly red across the board. In Europe, the same is true red across the board. As of 7:45 am, U.S. futures are pointing to third or a percent gap lower.
The bulls have been relentless for a long time. The long weekend, amount of extension and upcoming impeachment trial may have changed the tune to one that is a little more cautious. However, the trend is still the trend (until it is broken), so don't overreact. Look for long opportunities near support but don’t chase. Keep taking profits on a regular basis, moving your stops to protect yourself, and wait for the trade to come to you.
Swing Trade Ideas for your consideratoin and watchlist: ANGI, LOW, WYND, ENPH, LW, MU, M, TUP, SNDL, YNDX. Trade smart, take profits along the way and trade your plan. Also, don't forget to check for upcoming earnings. The stocks/etfs we mention and talk about in the trading room are not recommendations to buy or sell.
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