Futures Up But Chart Bearish to Start Q4

Markets gave us another bull trap Thursday with about a four-tenths of a percent gap higher met with immediate and all-day selling.  This took us out very near the lows and gave us big, ugly, black candles for the session in all 3 major indices.  On the day, SPY lost 1.22%, DIA lost 1.59%, and QQQ lost a comparatively small 0.37%.  The VXX was flat at 27.83 and T2122 fell back into the oversold territory at 18.51.  10-year bond yields fell to 1.496% and Oil (WTI) rose slightly to $75.02/barrel.

During the day Thursday, both the Senate and House passed a government funding bill.  This will keep the federal government operating until early December as well as providing for some hurricane and Afghan Refugee Resettlement aid.  However, it just kicks the can down the road on the $3.5 trillion budget and avoids altogether the Debt Ceiling issue, which could result in a US default on debt if not raised in the next 18 days.  On the other agenda item, the bipartisan Infrastructure Bill, House Speaker Pelosi failed to push through a vote Thursday night as the progressives of her party balked.  She now “hopes” for a vote on the bill today.

MRK and Ridgeback Biotherapeutics announced they are seeking FDA emergency authorization for an oral antiviral treatment (not vaccine) that phase 3 trial results have now shown to reduce the risk of hospitalization or death by 50%.  If approved, the drug, molnupiravar, would be the first oral treatment for Covid-19.  As long as we’re on the subject, as of yesterday, the US has seen 44.3 million total cases and 716,847 total deaths in the country.  Meanwhile, the averages have fallen back to 109,464 new cases and 1,626 new deaths per day across America. 

Auto industry forecasters are now predicting that car sales plummeted in Q3.  The consensus among the 3 main industry analyst groups say that sales between July and September were down 13%-14% from Q3 2020. The primary driver of this lack of sales is the global ship shortage that caused production cuts across all major manufacturers.  September alone is expected to come in 25% below the 2020 sales number.  While Japanese manufacturers have faired a bit better (due to keeping larger inventories of components as a normal course of business), all regions of the globe are now feeling the pain.

Overnight, Asian markets were mixed but mostly red on Friday.  Japan (-2.31%), Taiwan (-2.15%), and Australia (-2.00%) paced the losers.  Meanwhile, Shenzhen (+1.63%) and Shanghai (+0.90%) led the gainers as Evergrande contagion fears waned.  In Europe, markets are also mostly red at mid-day.  The FTSE (-1.02%), DAX (-0.65%), and CAC (-0.37%) represent a typical spread across the continent in early afternoon with only Greece and Portugal barely holding on to the green side of flat.  As of 7:30 am, US Futures are pointing toward a slightly lower open ahead of data.  The DIA is implying a -0.21% open, the SPY implying a -0.15% open, and the QQQ implying a flat -0.04% open at this hour.  However, 10-year bond yields, the Dollar, and petroleum commodities are all down in early trading.

The major economic news scheduled for release on Friday is limited to August PCE Price Index and August Personal Spending (both at 8:30 am), Mfg. PMI (9:45 am), and ISM Mfg. PMI and Michigan Consumer Sentiment (both at 10 am).  There are no major earnings reports scheduled for the day.

Welcome to October and Q4. Mr. Market seems to be greeting us with more of the same as overnight markets were down significantly, but are recovering strongly so far this morning. So, volatility remains the watchword. Overall, having broken out of their "dreaded h" patterns, the major indices are going to be seeking support below. However, it is Friday. So, many traders will be looking to reposition for the weekend.

Again, remember you don't have to trade every day. Cash is a perfectly valid position. Consider waiting, if you want to go long in this market, and even if you trade short, stay nimble because you know bear moves end faster than bull moves. Focus on the process and on managing the things you can control. It's discipline and good trading rules that separate trading success from failure over the long run. Above all, consistently take profits when you have them. A good trader refuses to let greed turn their winners into losers.

Ed

Swing Trade Ideas for your consideration and watchlist: No trade ideas today. 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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