Monday saw a gap higher about seven-tenths of a percent and continued a strong morning rally apparently on less concern over the President’s health and hope for more stimulus.  After a mid-day grind sideways, a late day rally took the markets out near the highs.  This left us with large white candles across all 3 major indices.  On the day, QQQ closed up 2.13%, SPY up 1.77%, and DIA up 1.70%.  VXX fell 3% to 24.97 and T2122 rose deep into overbought territory at 92.64.  10-year bond yields rose strongly to 0.778% and Oil (WTI) spiked 6% to $39.35/barrel.

On the stimulus story, House Speaker Pelosi and Treasury Sec. Mnuchin spoke for an hour Monday without reaching a deal.  However, the two sides will exchange proposal documents and are scheduled to speak again today.  In related news, LUV told its union employees that it can only avoid mass layoffs if they take large pay cuts (unknown amount) and that there was no time for long, complex negotiations over this matter. The company has already cut executive salaries by 20%.

Related to the year-long Tech Giant Anti-trust hearings in Congress, a Republican committee member (Buck, CO) told Politico that the committee report will call for AMZN and AAPL being prevented from owning marketplaces in which they sell their own products as well as those of competitors.  Other portions of the Democratic majority recommendations would represent a major update of the Glass-Steagall anti-competition law.  The release of the report is being delayed after last-minute new information surfaced related to the FB purchase of Instagram in 2012 and to incorporate GOP comment and objections.  Buck also told the reporter that the things proposed by the committee are non-starters for Republicans.  In an unrelated story, AAPL stopped the sale of competing speakers and earphones ahead of the launch of their own new products in those areas.

On the virus front, in the US, the numbers show we now have 7,679,908 confirmed cases and 215,039 deaths.  The 7-day average daily new case count continues to rise and is now back up to 44,397, while the lagging average of deaths remains relatively flat now at 747.  The new case count is rising in 36 states as of Monday (based on 7-day average). The CDC also revised its guidance again Monday, reversing course to acknowledge that the virus can linger in the air up to hours and can be transmitted via airborne particles.  The FDA also reported that it now expects at least one “emergency use” vaccine application by year-end. Meanwhile, Dr. Fauci again warned that the US is still lagging behind where it needs to be on Covid-19 testing coming into Winter.

Globally, the numbers rose to 35,740,361 confirmed cases and the confirmed deaths are now at 1,046,633 deaths.  In the EU, the European Medicines Agency has begun a rolling review of the BNTX vaccine (Oxford UK study).  This does not reduce the approval hurdles, but does speed up the process of evaluation.  In good news, India reported the lowest new case total (61, 267) it has seen in 6 weeks.  However, in less bright news, several European countries are introducing new restrictions.  France, has raised the alert level to maximum in the region around Paris, ordering the closing of bars again for at least 15 days.  Germany mandated that Parliament wear masks at all times and the Czech Republic declared a second state of emergency.

Overnight, Asian markets were mixed but leaned to the green side as Australia’s central bank held steady on policy and rates.  India (+1.38%) was the only mover of more than 1%.  In Europe, markets are also mixed but leaning green.  The 3 major European Bourses are all slightly positive, with the FTSE up 0.05%, DAX up 0.17%, and CAC up 0.33%.  The losses seen are all in smaller markets like Denmark, Switzerland, and Amsterdam.  As of 7:30am, US futures are all just on the red side of flat.  The DIA is flat at -0.02%, SPY -0.23%, and QQQ -0.36%.

The major economic news for Tuesday includes August Imports, August Exports, and August Trade Balance (all at 8:30 am), August JOLTS (10 am), and a trio of Fed speakers (Chairman Powell at 10:40 am, Harker at 11:45 am, and Kaplan (6 pm). On the earnings front, PAYX reports before the open and LEVI reports after the close.

After Monday’s strong bullish run, we still have no stimulus, but the President did get released to the White House medical facilities (versus actual hospital).  With earnings starting in a few days, it seems the market is both assuming and anticipating another shot of “free money” stimulus.  This comes as Piper Jaffray reports teen spending has hit an all-time low.  So, while it’s hard to bet against the bulls here, there is no general economic optimism or stimulus underpinning the move…just expectation.  In fact, most economists say the recovery is slowing and expect some sort of recession in 2021 regardless. So, be very wary of volatility or, heaven forbid, the government or economy not meeting market expectations.  

I was dead wrong yesterday about the gap-and-fade. The bulls never looked back for some unknown reason.  I suppose that’s just another reminder to not predict…just follow the chart. So, stick to your rules, follow the trend, and don’t chase moves you have missed.  Don’t get too far exposed either direction in this volatile market. Also remember to keep locking-in profits, because a trader’s job is to make consistent gains…not win bragging-rights.

Ed

Swing Trade Ideas for your consideration and watchlist: LB, NIO, NUAN, BLNK, FB, AAPL, BA, INTC. 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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