Friday was a volatile day as stocks gapped half a percent higher on much stronger than expected October Payrolls and lower than expected Unemployment.  However, after the gap, all 3 major indices just drifted sideways until noon.  Then a sharp selloff took us to the lows of the day by 1:30 pm.  Finally, a modest rally and sideways grind took back near the gap.  This left us with gap-up Doji or Spinning Top type candles in all 3 major indices.  It also meant another all-time high close in all 3 of them.  On the day, SPY gained 0.35%, DIA gained 0.54%, and QQQ gained 0.10%.  (For the week, SPY gained 2.02%, DIA gained 1.42%, and QQQ gained a whopping 3.23%.)  The VXX rose to 20.83 and T2122 jumped back up into the overbought territory at 90.26 at day end.  10-year bond yields fell sharply to 1.455% and Oil (WTI) gained almost 3% to $81.19/barrel.

Over the weekend, the House passed the $1 trillion Infrastructure Bill and sent it to the President for signing.  The bill includes $110 billion for road and bridge repair and replacement as well as $66 billion in freight and passenger railroad maintenance and upgrade.  $65 billion will go to improving the electric grid, another $50 billion to make the grid more resilient.  $55 billion will go for upgrades to water infrastructure (including removing lead pipes).  The bill will also give $65 billion to internet providers (Telcos and Cable companies mainly) for rural broadband.  $47 billion will go toward cybersecurity and climate change threats.  $42 billion will go to airport repair, expansion, and modernization and $39 billion will be used to modernize public transit.  $17 billion goes for seaport improvements, as well as $11 billion for safety, $7.5 billion for electric vehicle charging stations, and $7.5 billion for electric school buses.

BRKA / BRKB also reported that they had an 18% increase in earnings last quarter, citing a strong rebound in railroad, utilities, and energy businesses (reporting $6.47 billion in operating income).  Berkshire also reported a record $149 billion in cash on hand (up over $5 billion from the prior quarter), despite an aggressive stock buyback plan (which repurchased $7.6 billion of BRK stock during the quarter).  Of note to investors, since Buffett is the ultimate value investor, when he is hoarding cash it means he thinks companies and stocks are over-valued. 

In miscellaneous market news, cryptocurrencies are surging this morning.  Ethereum is at an all-time high and Bitcoin is nearing its all-time high again as well as the volatile swings continue in that space.  Elsewhere, TSLA stock is taking a nasty hit this morning after Elon Musk took to TWTR on Saturday.  Musk launched a poll asking whether he should sell 10% of his TSLA stock as a gesture toward avoiding unrealized (and therefore untaxed) gains on his TSLA stock holdings.  58% of the 3.5 million-plus respondents said “yes, he should sell the stock and pay tax on the gains.” (I guess this is a prime example of, “never ask a question to which you don’t already know the answer”.)

Overnight, Asian markets were mixed in modest trading.  India (+0.85%), Indonesia (+0.77%), and Singapore (+0.66%) led to the upside.  Meanwhile, Hong Kong (-0.43%), Japan (-0.35%), and South Korea (-0.31%) paced the losers.  In Europe, stocks are mixed on widely varied trading.  Denmark (+1.50%) and Greece (+0.97%) are both up strong at mid-day.  However, the FTSE (-0.03%), DAX (-0.17%), and CAC (+0.22%) are generally flat in early afternoon trading.  As of 7:30 am, US Futures are pointing toward a flat open.  The DIA is implying a +0.19% open, the SPY implies a +0.06% open, and the QQQ implies a -0.01% open at this hour.  10-year bond yields are back up to 1.479% and Oil (WTI) is up 1.10% in early trading. 

There is no major economic news scheduled for release on Monday.  Major earnings reports scheduled for the day include COTY, GTES, VAC, THS, USFD, and VTRS before the open.  Then after the close, AEL, CBT, IEA, IFF, BEKE, DOOR, MRC, PYPL, PRI, PRIM, RBLX, TME, TPIC, VGR, and ZNGA report.

With no economic news on the docket and no real earnings of note this morning, it would seem Infrastructure bill winners/losers and follow-through on last week’s strong bullish momentum will call the tune this morning. We remain quite extended to the upside and all 3 major indices can easily be seen as gap-up star candles on Friday. So, watch for signs of an Evening Star.

With that said, we have to remember that the market can remain very extended much longer than you can stay solvent while being right about a reversal too early. Long-term trading success has never come from betting on a reversal yet to come. The trend is our friend.

Focus on your trade rules and on managing the things you can control. That should include consistently taking profits when you have them and moving your stops in your favor. Watch your current positions before looking to add any new trades. Trade carefully and think twice about holding through earnings.

Ed

Swing Trade Ideas for your consideration and watchlist: FCEL, BBIG, LCID, XLE, FSM. 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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