Markets opened flat on Wednesday and then sold off briefly before starting a slow rally that lasted all day long. The major indices are all testing their T-line (8ema) above as of day end. This left us with Bullish Harami candles that closed near their highs in all 3 major indices. On the day, SPY gained 0.83%, DIA gained 0.68%, and QQQ gained 0.74%. The VXX fell almost 4% to 25.43 and T2122 rose into the mid-range at 65.42. 10-year bond yields rose to 1.304% and Oil (WTI) gained over 3% to $72.64/barrel as oil inventories came in tighter than expected (Gulf of Mexico production still only at 60% of pre-hurricane Ida levels) and the Dollar fell against other major currencies.
Tax hikes to pay for the Democratic domestic agenda were passed out of the House Ways and Means Committee on Wednesday. The current version would raise $2.9 trillion, primarily by increasing the top corporate tax rate to 26.5% and imposing a 3% surcharge (added tax) on individuals earning more than $5 million per year.
Last night, Elon Musk’s SpaceX launched an all-civilian rocket into actual orbit of the earth. (360 miles, many times higher than the sub-orbital flights of the SPCE and Blue Origin flights. The consensus is that this accomplishment is exponentially more difficult than the flights accomplished by the other two companies.) There is speculation that SpaceX will be taken public via IPO in the next year.
Yesterday the FDA refused to take a stance on the PFS booster shot. The agency cited a lack of “verified” data. MRNA also released data on “breakthrough” cases that the company said support the need for booster shots. In general virus news, the total number of cases has risen to 42,479,780 confirmed cases and deaths are now at 685,023. Meanwhile, the averages have seemed to are plateau at 152,891 new cases and 1,609 new deaths per day.
Overnight, Asian markets were mostly in the red again, led by Chinese stocks. Shenzhen (-1.91%), Hong Kong (-1.46%), and Shanghai (-1.34%) led the region lower. However, India (+0.63%) and Australia (+0.58%) were the clear leaders on the green side as Australian unemployment came in lower than expected. In Europe however, markets are mostly on the green side at mid-day. The FTSE (+0.48%), DAX (+0.54%), and CAC (+1.09%) are typical of the region with only Russia (-0.36%) and Portugal (-0.45%) on the red side of the ledger in early afternoon trading. As of 7:30 am, US Futures are pointing to a flat open again. The DIA is implying a +0.01% open, the SPY implying a -0.07% open, and the QQQ implying a -0.16% open at this hour. The Dollar and 10-year bond yields are up and Oil (along with other commodities) down in early trading.
The major economic news scheduled for release on Thursday includes August Retail Sales, Philly Fed Mfg. Index, and Weekly Jobless Claims (all at 8:30 am), and July Business Inventories (10 am). Notably, these are the last major economic data points coming ahead of next week's Fed meeting. There are no major earnings scheduled for the day.
The bulls pushed back against the recent downtrend yesterday. However, the large-caps are still fighting with the T-line and 17-ema (as well as recent levels) as resistance above. While the QQQ is just back up above the two moving averages, it too continues to have resistance overhead. The point is that while the bulls woke up Wednesday, none of the major indices have broken the downtrend yet. With that backdrop, the morning news, especially Jobless Claims, are likely to drive early action today.
Remember you don't have to trade every day and that the Trend is your friend. 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 about the things you can't control. Discipline and good trading rules are what separates trading success from failure over the long run. Above all, consistently take profits when you have them. A good trader refuses to let greed turn their winners into losers.
Swing Trade Ideas for your consideration and watchlist: IGT, CTRM, CSCO, PLAN, F, PLTR, FSM, INTC, DVN. 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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