Markets gapped modestly higher Wednesday on a DIS beat of massively reduced expectations and were held back by a huge miss in new ADP July payrolls and the lack of progress on a stimulus package deal.  The SPY and QQQ chopped sideways the whole day, but DIA had a rally on the back of DIS and BA (after GOP Senators proposed $25 billion in airline industry aid.  On the day DIA was up 1.34%, SPY up 0.60%, and QQQ up 0.25%.  The VXX fell 2% to 27.04 and T2122 rose higher into the overbought territory at 94.81.  10-year bond yields rose to 0.551% and oil climbed to $42.16/barrel.  Gold also continued its rally closing at another record of $2,051.40/oz as the dollar continued to devalue. 

Bloomberg reported Wednesday afternoon that the country’s 4 largest banks (JPM, WFC, BAC, C) had $152 billion in loans that are in “deferred payments” status as of the end of June.  Since there is no standardized reporting of this information to the SEC, it is likely the total in “deferred” status is much higher.  For example, WFC only reports on residential loan deferrals (not commercial).  At the same time, C outlined only that most of its deferred payments are coming from credit cards.

The stimulus plan negotiations made some progress Wednesday with the White House agreeing to higher unemployment benefits through December (70% of compensation plus $400/week) and Democrats agreeing to reduce their Postal Service funding from $25 billion to $10 billion.  Meanwhile, away from the negotiations, Republican Senators who are up for reelection offered their own bill that is even more generous than what the White House agreed. The 3 Senators offered 80% of compensation plus $400-$500/week (at State discretion) for August and then 80% plus $400/week through the end of the year. Even though not part of the negotiations, since it was introduced as a bill, one has to assume their levels become the minimum of an end-deal.

In the US, the virus numbers show we have 4,973,741 confirmed cases and 161,608 deaths.  On the day, we saw over 55,000 new cases (still suspiciously well below a week ago and far below the 7-day average) and over 1,300 deaths (above the 7-day average).  KS reported late Wednesday that its counties that do not have mask mandates have seen higher spread rates than those that have mandates.  Meanwhile, another group (The Infectious Disease Society of America) urged a Federal mask mandate in an open letter to VP Pence.  In virus-related business news, JNJ reached a $1 billion deal with the government to produce 100 million doses of vaccine, once a vaccine has been approved. 

Globally, the number of cases has reached 19,005,651 confirmed cases and 711,863 deaths.  In Europe, both France and Germany reported their highest daily increase in cases since May while the spread in Spain is back to levels it saw in April. Poland also increased restrictions a notch again.  In Asia, Australia’s 2^nd largest city (Melbourne) has been placed on total lockdown for 6 weeks.  In China, despite a tiny new case count, the country has ramped up testing to 4.85 million tests per day.

Overnight, Asian markets were mixed but leaned toward the green side again.  The only significant movers were South Korea (+1.33%) and Singapore (+1.04%).  At the same time, China, Japan, and Hong Kong were modestly lower.  However, in Europe, we see red across the board at this point.  The FTSE is down 2%, CAC down 1.2%, and DAX down 0.85%.  The only news I know of that may be the driver in Europe is the Bank of England holding rates steady and warning of slower recovery.  However, it may be the trade war between the US and China or even the lack of a US stimulus deal that weighs on sentiment.  In the US, at 7:30 am futures are flat, all 3 major indices sitting just on the red side of break-even from yesterday’s close.

The major economic news is limited to Initial Jobless Claims (8:30 am) and a Fed speaker (Kaplan at 10 am).  Major earnings releases include ADNT, AEP, AES, BCE, BDX, BHC, BLL, BMY, CAH, CNP, CNQ, COMM, CORE, GLP, HFC, HII, HLT, HWM, JLL, KBR, LNG, MYL, NSIT, OLN, PH, PWR, TEN, THS, TRGP, VIAC, WLK, and ZTS all before the open.  Then after the close, AEE, AVT, BECN, BHF, CWK, DXC, ED, EOG, FLO, HLF, MWK, PBA, PRSP, POST, RSG, TDS, TMUS, UBER, UNVR, and WCN report.  

Markets remain seemingly unrelentingly bullish.  The SPY is now back to within 2% of its all-time high and QQQ seems to print new all-time highs daily.  However, by most counts, markets could use a rest again.  Still, this most recent surge has come in a more orderly action (fewer huge gaps and whipsaw candles).  And that sort of price action tends to allow moves to last longer.  So, don’t fight the trend, but remain aware that another pause or swing to the downside may come soon. 

As always, stick to your trading rules and execute with discipline.  Follow the trend, don’t predict reversals or chase missed-moves, and don’t be greedy.  Take profits along the way.  Remember, a trader’s job is to consistently achieve goals and build their account.  It’s a job, so treat it that way and work rather than hoping to catch those 2,500% “lightening in a bottle” trades.  There are a lot of reads that made a killing taking profit on the KODK explosion and a lot more that chased or wanted even more and have now blown out their account.  Learn that lesson.  

Ed

The Daily Swing Trade Ideas for today: BB, MRO, F, NLY, NIO, CAR, PAAS, ABT, URI, IAG. 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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