Markets gapped higher and were volatile on the day with all three major indices ending at all-time high closes.  (SPY up 0.69%, DIA up 0.34%, and QQQ up 1.00%.) However, the SPY printed an indecisive Doji and the DIA printed a Shooting Star (or at least Gravestone Doji) type candle.  The bottom line is that while the bulls clearly have control, there are some warning signs.  In addition, T2122 is not in the overbought area at 83.46.

Among the major business news on Monday was that BA will halt 737 Max production in January.  This comes due to the delays in FAA recertification, the loss of new sales and cancellations of existing orders have been mounting.  For example, LUV (the largest US customer for 737 Max aircraft) canceled another month of 737 Max flights (300 per day), pushing the earliest they will fly those planes out again until at least April.

Another story was that the fight between FEDX and AMZN has heated up again.  It seems Amazon announced it will no longer permit Amazon Marketplace Sellers to use FEDX for ground deliveries, effective immediately.  In addition, AMZN has announced they will launch their own air delivery service, including 50 aircraft and an air delivery hub opening in Kentucky during 2021.

Overnight in the UK, British press reports that PM Boris Johnson is adding a clause to his Brexit Bill (which now has plenty of votes to pass).  The new clause explicitly rules out any extension of the transition period (the post-breakup period when trade deal was to be negotiated). This means the EU-UK trade deal must be negotiated, written and passed by both sides within 11 months.  While this sounds reasonable, it took the parties 3+ years just to agree to terms of the break-up and the trade deal has always been seen to be the much more complicated task.  The UK Pound fell one and a quarter percent on the news.

More China trade deal details also came from China overnight.  It seems that part of their additional “Ag purchases” will be in the form of ethanol.  They will also reclassify all trade with Hong Kong to be part of the Chinese portion of the phase one deal.  (This Hong Kong move immediately wipes out $10 billion of their additional $40 billion in purchases from the US.)

The major economic news for Tuesday includes Nov. Building Permits and Nov. Housing Starts (both at 8:30 am), Nov. Industrial Production (9:15 am), and JOLTS (10 am).  The only earnings of note are CTAS and FDX, both after the close.

Overnight, Asian markets were green.  In Europe, markets are mixed, but mostly in the red on the new hard EU-UK trade deal deadline.  As of 7:30 am, U.S. futures are mixed on either side of flat.  

The Santa Claus rally into year-end sure seems like a high probability.  However, we all know the market psyche is fragile and that we worry about extension at these highs.  All we can do is trade the market we are given and focus on short-term swings.  We all know market move in zigs and zags.  So, continue to take profits, move stops, plan your trades, and trade your plans. 

Ed

Swing Trade Ideas for your watchlist and consideration: CTXS, FIVN, CROX, WCG, ENBL, WWE, GRUB. Trade smart, take profits along the way and trade your plan. Also, do not forget to check for upcoming earnings. Stocks we mention and talk about are not recommendations to buy or sell.

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