Jobless Claims, Fed Speakers, and ECB

Markets opened just on the red side of flat Wednesday and after a shaky first 5 minutes, the bulls rallied to test the small gap.  However, that rally failed by 10:30 taking us to the lows by 11 am.  The rest of the day was a whipsaw of small waves that closed up off the lows. This left us with indecisive Doji candles in the DIA and SPY and a long-wick Hammer (or Hanging Man) in the QQQ.  This was also the third straight lower close in the large-cap indices and the first in the QQQ. On the day, SPY lost 0.13%, DIA lost 0.21%, and QQQ lost 0.35%.  The VXX was flat at 25.51 and T2122 fell again to 33.33.  10-year bond yields fell significantly again to 1.338% and Oil (WTI) was up 1.5% to $69.36/barrel. 

During the day Wednesday, the Fed JOLTS report showed that that were 10.9 million job openings in July.  This was much higher than the 9.9 million estimated and was more than 2 million more openings than there were unemployed.  Interestingly, the percentage of openings that saw hires fell from 4.7% to 4.5% while the percentage of workers who quit remained stable at 2.7% and the rate of new layoffs grew by 1%.  Analysts say this indicates workers were confident and that wages for job openings were not high enough to overcome prospect expectations and inflation perceptions.

Overnight, Chinese regulators called the executives of Tencent, NetEase, and other game companies in to remind them of the new restrictions on game time for children.  Those restrictions limit Chinese under age 18 to a maximum of 3 hours per week of online gameplay.  China also announced a temporary halt to new game approvals. Finally, Chinese education authorities banned tutors and education companies from delivering lessons online or in any unregistered venue. These moves caused investors to run for the door on Chinese tech stocks and may well bleed over into China-related stocks listed in the US.

Treasury Sec. Yellen warned House Speaker Pelosi that the Treasury Department will have exhausted its “extraordinary measures” at some point in October.  She called on Congress to raise the national debt ceiling before this happens, otherwise the country will default on debts.  This comes as the Democratic party is infighting over more progressive or more centrist versions of the national budget and as Republicans are saying "no" to both groups of proposals as all sides seek to appeal to their political bases (or principles if you prefer).  While this is on the fiscal side, it comes as the monetary taper debate intensifies and markets are grasping for direction.

Overnight, Asian markets were mixed but leaned to the downside.  Hong Kong (-2.30%) was hit hardest due to being the main exchange for Chinese tech stocks.  However, Australia (-1.90%) and South Korea (-1.53%) were also at the top of the list of exchanges in the red.  Shanghai (+0.49%) was one of the few green exchanges in the region. In Europe, markets are red across the board so far today as the region prepares for the European Central Bank meeting later today.  The FTSE (-1.15%) is an outlier with the DAX (-0.22%) and CAC (-0.20%) being more typical of the region at mid-day.  As of 7:30 am, US Futures are pointing to a modestly down open.  The DIA is implying a -0.23% open, the SPY implying a -0.24% open, and the QQQ implying a -0.20% open at this hour.  The Dollar and 10-year bond yields are down slightly while Oil (WTI) is up two-thirds of a percent in early trading.

The major economic news scheduled for release on Thursday is limited to Weekly Jobless Claims (8:30 am), Crude Oil Inventories (11 am), and 3 Fed speakers (Daly at 11:05 am, Bowman at 1 pm, and Williams at 2 pm).  The major earnings reports scheduled for the day include ASO and HOV before the open.  Then after the close, AMRK reports.

US Markets will likely take its early cue from Weekly Jobless Claims. However, the ECB will begin debating their taper later and Fed speakers will add to that storyline. So, expect some volatility, but Mr. MArket coming to a conclusion is still not likely today. The trend remains bullish, and the chart looks like a normal pause/pullback in all but the Dow. However, the signs of bearishness are clear in the DIA, where even the 50sma has been breached.

Remember you don't have to trade every day. So, consider whether this market suits your trading style or not before blindly trading. As always, manage your existing trades before you chase any new ones. Focus on the process and on managing the things you can control. Don't worry too much about the things outside of your control. Good trading rules and discipline is what separates long-term success from failure in trading. However, above all, consistently take profits when you have them. A good trader just won't let greed turn their winners into losers.

Ed

Swing Trade Ideas for your consideration and watchlist: SPRT, CLOV, T, AAPL, NVAX, BTCM, FUTU, SKLZ. 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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