Fear of a second wave of coronavirus helped the bears take the bull to the woodshed Thursday on what turned out to be the worst day for markets since March.  A 2.5% gap down at the open was followed-up with a steady all-day sell-off with the close near the lows.  The SPY is just below its 200sma, while the DIA gapped clear through it and is halfway to its 50sma.  The QQQ continues to hold its uptrend as it is still above even the 20sma.  On the day, the SPY lost 5.74%, the DIA lost 6.80%, and the QQQ lost 4.95%.  The VXX shot higher to 41.60 and T2122 fell sharply, but remains just inside overbought territory at 82.40.  Bond yields fell sharply as money chased safety, closing at 0.669% and Oil (WTI) fell 8% to $36.36/barrel.

The Fed released data Thursday that showed total US debt (household, corporate, and government) grew by almost 12% in Q1.  It had grown by 3.2% in Q4 of 2019.  The total is now just under $56 trillion.  The largest jump was 18.8% by business, followed by a 14.3% increase from government.  Household debt only grew 3.9% for the quarter.

At the same time, new jobless claims fell again this week to 1.5 million (down from 1.9 million last week).  There have been over 44 million new jobless claims made since the virus hit, but the trend has clearly been getting better in recent weeks.  So, with this week’s significant improvement, it is odd to note that 24 states recorded increases in initial claims.  In the larger context, the continuing claims fell but fell less than expected for the week, down to 21 million.

On the Virus front itself, the global headline numbers are 7,622,021 confirmed cases and 424,325 deaths.  The UK, who followed the US lead and delayed lockdown and social distancing, reports its GDP fell 24.5% (year on year) and 20.4% (month to month) in April.  This was significantly worse than the 18.4% month-to-month contraction that was expected.

In the US, we now have 2,089,825 confirmed cases and 116,036 deaths reported to date.  For the sixth time this month, the state of NC has recorded a record number of hospitalizations.  In TX, the city of Houston is close to needing to reverse its recent reopening measures.  Discussion is underway about whether they need to open a temporary hospital at the NRG stadium, which was built in April, but never had to be used. In Nashville TN, the Mayor has decided to delay further opening after a recent rise in cases in the city.  However, in NY state, they have opened up 5 more regions to business with some restrictions such as restaurants only being allowed 50% of normal indoor seating capacity. 

Overnight, Asian markets were mixed, but strongly leaning to the downside with only Shenzhen and India on the positive side.  Europe is mixed, but strongly leaning to the upside, with only Russia and Greece in the red so far today.  At 7:30 am, US futures are looking for a major rebound from Thursday’s pummeling, pointing to a gap higher of between 1.5% and 2.5% (the exact opposite of Thursday morning).

The major economic news for Friday is limited to May Imports/Exports (8:30 am) and Michigan Consumer Expectations (10 am).  There are no major earnings on the day.

The whiplash appears to want to continue.  It’s early, but as of now, we’re looking at a gap up as big as yesterday’s gap down at the open.  So, Mr. Market seems ready to punish the short-sellers who didn’t take profits at the close Thursday.   And while the uptrend was broken in the large-caps, the QQQ held its channel.  The bulls clearly have significant damage to repair, but a pullback had been long overdue.  So, the sky is not falling and the longer-term trend continues to point higher as of now.  Stay focused on the short-term chart.  Above all don’t chase, don’t predict, and don’t be greedy (take profits and move your stops as you go).

Ed

No Trade Ideas for Friday. (It’s payday, think about taking some off the table for the weekend.) However, keep an eye on the trading room and the Members Only App for tickers that come up today. Trade your plan, take profits along the way, and smart. Also, don’t forget to check for upcoming earnings. Finally, remember that the stocks/ETFs 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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