Markets opened basically flat on Tuesday (the DIA did gap a third of a percent higher) and then the 3 major indices ground sideways with a slight trend.  As a result, SPY printed a Doji (but at a new all-time high close), the DIA printed a black inside candle closing near the low with an upper wick, and the QQQ printed another nice white candle closing at the highs and at a new all-time high close. Semiconductors led the QQQ higher as SWKS, XLNX, AMD, CRUS, AAPL, QCOM, and AVGO all put in stellar sessions.  On the day large-caps closed basically flat, as the SPY gained 0.05%, the DIA gained 0.02%, and QQQ gained 0.36%.  The VXX gained 2% to 29.77 and T2122 fell again to 34.97.  10-year bond yields fell a bit to 1.475% and Oil (TWI) gained about three-quarters of a percent to $73.44/barrel.

CNBC reported this morning that Fed data released today indicates that markets may be past their peak level of inflation fear.  The data (pulled from FRED by analysts) reinforces Fed member positions that inflation is likely transient and not structural.  Specifically, the analysis looked at the 5-year break-even inflation rate (now at 2.45%) and the 10-year break-even rate (now 2.33%). (The break-even rate is the difference between the treasury yields and inflation-indexed bonds for a given period.)  This tells us bond traders now anticipate inflation to be falling in a longer timeframe, despite it rising in the short term.  Clearly, this is not gospel, but maybe an indication that stocks will continue to be attractive as longer-term safety trades can’t compete on return.   

Home prices surged in April according to the Case-Shiller Price Index.  The gained was 13.3% month-on-month and 14.6% year-on-year.  This was the biggest gain in home prices in 30 years.  While this does represent an increase in the value of the major asset of many American families, as with any average the gains were uneven.  High-end homes saw the biggest gains while lower-end home prices saw single-digit gains.  Charlotte NC, Cleveland OH, Dallas TX, Denver CO, and Seattle WA all saw their largest ever annual gains.  However, data out this morning shows that mortgage demand fell 7% this week (and 17% from one year ago) as 30-year interest rates rise.

After the close Tuesday, RCL announced that any passengers sailing from US ports without being fully-vaccinated, will be required to have travel insurance.  FL passed a law that exempts itself from this as of January 1, 2022, leaving the insurance burden on cruise operators for ships leaving their ports.

Overnight, Asian markets were mixed, but leaned to the green side.  Shenzhen (+1.08%) and Singapore (+1.33%) led to the upside.  Meanwhile, Malaysia (-1.01%) and Hong Kong (-0.57%) paced the losses.  However, in Europe markets are decidedly in the red as of early afternoon.  The FTSE (-0.59%), DAX (-0.93%), and CAC (-0.75%) are good indicators of the rest of the continent.  As of 7:30 am, US Futures are pointing to a dead flat open.  The DIA is implying a -0.02% open, the SPY implying a -0.01% open, and the QQQ implying a +0.01% open.  In addition, 10-year bond rates are moving significantly lower, now at 1.454%.

Major economic news scheduled for Wednesday includes ADP Nonfarm Employment (8:15 am), Chicago PMI (9:45 am), May Pending Home Sales (10 am), Crude Oil Inventories (10:30 am), and a Fed Speaker (Bostic at 8 am).  Major earnings reports scheduled for the day include BBBY, STZ, GIS, and SCHN before the open.  Then after the close, MU and YUMC report.

Interest rates came down overnight, but Oil and Nat Gas prices surged, even as the dollar is a bit stronger. However, yesterday’s gains were not widespread as only two of the 10 major sectors were in the green (technology, of course, and Consumer Cyclical). So, markets are showing signs of being wary at these levels. Be careful, but it’s hard to fight a bullish trend until it breaks.

Keep taking your profits, moving your stops, and maintaining your discipline. Follow those trading rules, don’t chase, and stick to the trade plan. The odds favor following the trend and, as always, respect both support and resistance levels. However, all trends reverse at some point and every S/R level is breached eventually. So, don’t just assume trend, support, or resistance will always hold. Remember that consistency is the key to long-term trading success. So, book those singles and doubles. Base hits win championships, not the occasional home run. So, don’t try to stretch things and get burnt in the process.

Ed

Swing Trade Ideas for your consideration and watchlist: PLUG, UCO, NOK, KOPN, DPZ, XBI, RKT, UBER, SQ, INO, AI, APPS, QS, RIDE, BABA. 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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Disclosure: We do not act on all trades we mention, and not all mentions acted on the day of the mention. All trades we mention are for your consideration only.

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