Jobless Claims and ECB Rate Decision Today

Stocks gapped down about half a percent Wednesday and then ground sideways in the gap until a selloff kicked in for about half an hour mid-day.  From there all 3 major indices resumed their sideways grind in a tight range.  This action gave us small-bodied black Harami candles with larger upper wicks.  Both large-cap indices closed the day at their T-lines.  However, all 3 remain in that choppy consolidation range of the last 1.5 weeks.  On the day, SPY lost 1.09%, DIA lost 0.84%, and QQQ lost 0.72%.  The VXX climbed six-tenths of a percent to 21.80 and T2122 fell just outside of the overbought territory to 78.15.  10-year bond yields jumped back up to 3.025% and Oil (WTI) surged another 2.7% to $122.61/barrel.

During the day, SEC Chair Gary Gensler unveiled proposed rule changes.  The new rules would require trading firms (wholesalers) and exchanges to compete in open auctions for trades.  In other words, the back-room deals where brokerages sell order flow to a specific outlet would be made illegal.  The rule would also require brokers to disclose how this will impact both order execution and the price received.  If approved, this would change the way order wholesalers do business and may impact the “zero commissions” model of some brokerages.  Another rule would reduce the minimum “tick size” to fractions of a penny to align with the way dark pools are allowed to trade.

After the close, ABM and GEF both reported beats on both the revenue and earnings lines.  However, FIVE missed on revenue while beating on earnings.

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In business news, VWAGY CEO Keogh told CNBC that the company is actively looking for US locations for a new battery manufacturing facility and a car assembly plant.  No specific amount of investment was given, but he said it was part of the German company’s $7.1 billion commitment to boost electric vehicle efforts in North America.  In a surprise, AAPL also clarified that it will be providing the loans for its “buy now, pay later” service by itself, without external partners from the banking or finance industries.  Finally, TWTR announced that it plans to hold a shareholder vote on the sale to Elon Musk in late July or early August.  This is part of the escalating tensions where Musk constantly tweets things that hurt the value of TWTR and questions whether he will walk away from the deal while the company insists that he has an iron-clad purchase contract.

Overnight, the EU voted to ban gasoline and diesel vehicles (cars and vans) after 2035. Across the channel, the UK had already voted to prohibit those sales after 2030. So, the European stance was a compromise slower timeline to help the poorer EU nations. Also this week, the Biden Administration has announced standards for electric charging stations. (Currently, there is no standardization.) These new standards will guide the spending of $7.5 billion the bipartisan Infrastructure Bill allocates toward a national electric charging station network.

So far this morning, NIO and SIG have both reported beats on both lines.  Meanwhile, BILI beat on revenue while missing on earnings.

Overnight, Asian markets leaned heavily to the downside.  Only Japan (+0.04%), Thailand (+0.27%), and India (+0.74%) managed to stay in the green.  However, Shenzhen (-1.85%), Australia (-1.42%), and Shanghai (-0.76%) led the rest of the region lower.  In Europe, we see a similar story taking shape at mid-day.  The FTSE (-0.41%), DAX (-0.66%), and CAC (-0.26%) are typical of the region with only 2 exchanges barely hanging on to green in early afternoon trading.  As of 7:30 am, US Futures are pointing toward a modestly green open.  The DIA implies a +0.43% open, the SPY is implying a +0.46% open, and the QQQ implies a +0.46% open at this hour.  10-year bond yields and Oil (WTI) are both flat in early trading.

The major economic news events scheduled for release Thursday brings Weekly Initial Jobless Claims (8:30 am). However, many traders will also be watching the ECB for their rate decision (as a read-through on Fed action, even as a 50 basis point move by the Fed is priced into futures as almost a mortal lock). The major earnings reports scheduled for release include BILI and SIG before the open.  Then after the close, DOCU, SFIX, and MTN report.

In economic news later this week, on Friday we get May CPI, Univ. of Michigan Consumer Sentiment, the WASDE Report, and the May Federal Budget Balance.

On the earnings front for later this week, on Friday there are no major reports scheduled.

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With Jobless Claims coming later this morning, premarkets look to have bounced up off the T-lines and are modestly positive at 7:30 am. Just remember that the open has not been a great indicator of where the day will close recently. The chop zone still prevails and we need to respect that range’s boundaries until it is clearly broken by a new directional move.

Technically speaking, we remain way over-bought in a choppy consolidation zone that started nearly 2 weeks ago. None of the major indices are in an uptrend yet (at least on a daily chart), but we may have a higher-low in all 3 of them. So, we remain in limbo with the mid-term downtrend broken, but a potential new uptrend that has not been confirmed. This is a dangerous area for Swing Traders. So continue to be careful, nimble, and/or hedged. (Or sit on your hands.)

Remember to be very careful chasing gaps/moves early. The whipsaw is very real during times when we are thinking about changing trends and as we’ve seen lately, gap-chasers can get hurt. Trading is our job. So, do the work and work the process. Stick with your trading rules, trade with the trend, and consistently take profits when you have them. Always move your stops in your favor. Remember that the first rule of making big money in the market is to not lose big money in the market. So, don’t be stubborn. If you have a loss, just admit you were wrong and take it before it grows. As they say, the best time to have taken a $500 loss is when you are now staring at a $1,500 loss. Finally, remember that you get rich steadily over the long run in Trading…not by striking it rich on one or two trades. So, give up that lottery ticket mentality.

Ed

Swing Trade Ideas for your consideration and watchlist: MRNA, DKNG, CRM, CTVA, LLY, ABBV, AUY, BA, NKE, ROKU, CTIC. 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.

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🎯 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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