Markets diverged at the open Wednesday, with the DIA flat, the SPY opening half of a percent higher and the QQQ gapping up 1.2%.  All 3 major indices then meandered sideways until noon.  However, at that point, we saw a market-wide slow, steady rally all the way into the close.  This left us with a white candle in the DIA, a white Spinning Top candle in the SPY, and a black Hanging Man candle in the QQQ.  On the day, DIA gained 0.59%, SPY gained 0.97%, and QQQ gained 0.81%.  The VXX fell another 2% to 19.42 and T2122 fell just outside of the overbought territory to 76.40.  10-year bond yields fell to 1.772% and Oil (WTI) closed very slightly lower to $88.02/barrel.

The economic news for the day was a massive miss on ADP Nonfarm Employment (-301k in January vs +207k expected).  Crude Oil Inventories also came in almost 50% below expectations at 1.046m barrel. This gives us the “double whammy” of fear about a slowing economy AND fear that energy prices will remain very high. 

After the close, QCOM, MET, CTCH, AFL, ALGN, MCK, AVB, MAA, ESS, HOLX, QRVO, and FBHS all beat on both lines.  However, FB, TMUS, and GL all missed on earnings while beating on revenue.  LNC posted a miss on both revenue and earnings.  The big news of this was the FB miss, where they missed on earnings and reported lower than expected forecasts for the remainder of the year.  As a result, FB was down 25% in post-market trading, dragging many of the tech giant names along with it.

So far this morning, TMO, WM, BSX, EMR, ROP, IDXX, ODFL, DHI, AVY, ABC, JCI, and MPC have all reported beats In Fed watch news, the Bank of England raised interest rates for a second straight meeting in a unanimous vote.  That was the first consecutive meeting hike in the UK since 2004.  This 25-basis-point move raises the UK bank rate to 0.50%.  The BOE also raised its inflation forecast to now expect a peak in April of 7.25% (from the 6% peak they had forecast in December), a massive jump.

Overnight, the Asian markets that were open were mixed.  (All Chinese markets are closed until Feb. 4th or 5^th).  Singapore (+2.04%) and South Korea (+1.67% on its first day back from holiday break) led the gainers.  Japan (-1.06%) was the biggest loser of the day.  In Europe, stocks are red across the board at mid-day.  The FTSE (-0.20%), DAX (-0.44%), and CAC (-0.23%) are all down, but it is the smaller exchanges that are leading the way lower with many down 1%-2% in early afternoon trading.  As of 7:30 am, US Futures are pointing to a divergent, but significant gap lower.  The DIA implies only a -0.22% open, the SPY is implying a 1.07% open, and the QQQ implies a -2.24% open in what appears to be a major rotation to the safety of mega-cap harbors.  10-year bond yields are up to 1.798% and Oil (WTI) is down 1.38% in early trading (perhaps in reaction to OPEC’s decision to hike production by 400k barrels per day.

The only major economic news scheduled for release Wednesday are ADP Nonfarm Employment (8:15 am) and The major economic news scheduled for release Thursday includes Q4 Nonfarm Productivity, Q4 Unit Labor Costs, and Weekly Initial Jobless Claims (all at 8:30 am), Jan Service PMI (9:45 am), Dec. Factory Orders and Jan. ISM Non-Mfg. PMI (both at 10 am).  Major earnings reports scheduled for before the market include ABB, ABMD, WMS, AME, APTV, ARW, BSAC, BCE, BDX, BERY, BIIB, BV, CAH, CG, CHKP, CI, CMS, COP, CMI, LLY, EL, HAIN, HBI, HSY, HON, HUBB, ITW, INGR, ICE, JHG, LAZ, MKL, MMS, MRK, MTOR, NOK, PH, PENN, DGX, RL, SNDR, SNA, TKR, VSAT, VSTO, GWW, WEC, WRK, and WRK.  Then after the close, ATVI, AMZN, AVTR, BECN, BHE, BYD, CLX, COLM, DECK, F, FTNT, FTV, HIG, LPLA, MCHP, NFG, NLOK, NOV, OTEX, PFSI, PINS, POST, PRU, RGA, SKX, SKYW, SWKS, SNAP, and WERN report.

The (relief ?) rally looks to be facing pressure this morning as traders panic in light of FB missing badly on both results and revenue forecasts. The large divergence in premarket moves by the various indices shows clear signs of a rotation. However, overnight rotations can often lead to whipsaw action as late risers try to chase and the premarket traders have second thoughts. In addition, the recent strong rally is in need of the relief of either a pullback or consolidation. So, be careful. Volatility is likely today.

Stick to your trading rules and manage the things that you can control. Trade with the trend, don’t chase, keep consistently taking profits when you have them, and move your stops in your favor. Remember that the first rule of making money in the market is to not lose big money in the market. So, don’t be stubborn, and protect yourself from yourself. If you are wrong, just admit it and take your loss. (That’s why we set stops in the first place.) Trading is a marathon, not a sprint.

Ed

Swing Trade Ideas for your consideration and watchlist: GME, AMD, BAC, KO. You can find Rick’s review of tickers on his YouTube Channel here. Trade your plan, take profits along the way, and smart. Also, remember to check for impending earnings reports. Finally, remember that any tickers we mention and talk about in the trading room are not recommendations to buy or sell.

🎯 Mike Probst: Rick, Got CTL off the scanner today. Already up 30%. Love it.

🎯 Dick Carp: the scanner paid for the year with HES-thank you

🎯 Arnoldo Bolanos: LTA scanner really works $$, thanks Ed.

🎯 Bob S: LTA is incredible…. I use it … would not trade without it

🎯 Malcolm .: Posted in room 2, @Rick… I used the LTA Scanner to go through hundreds of stocks this weekend and picked out three to trade:  PYPL, TGT, and ZS.   Quality patterns and with my trading, up 24%, 7% and 12%…. this program is gold.

🎯 Friday 6/21/19  (10:09 am) Aaron B: Today, my account is at +190% since January. Thanks, RWO HRC Flash Malcolm Thomas Steve Ed Bob S Bob C Mike P and everyone that contributes every day. I love our job.

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