Looking at Another Gap Down This Time

My apologies upfront about today’s blog.  I’m under the weather today and not quite up to speed.

Wednesday saw a strong gap higher and an all-day rally as markets apparently liked the idea of Joe Biden winning Super-Tuesday.  The day closed very near the highs with the SPY up 4.20%, the DIA up 4.47%, and the QQQ up 4.17%.  The VXX fell back to 23.00, but obviously still elevated.

Coronavirus remains the main news outside of the election results. The headline virus numbers have risen to 96,300 confirmed cases and over 3,300 deaths globally.  This includes over 13,000 cases outside China as the outbreaks in places like South Korea (6,100), Italy (3,100), Iran (3,520), Japan (320), France (260), Germany (350), Spain (170), and the US (160) continue to expand.  In the US, cases exist in 14 states and the death toll has now risen to 11.  It is worth noting that Wuhan China is reporting an increase in relapse rates of previously cleared patients being re-admitted for symptoms and testing positive again. 

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In terms of impact, the parade of closures, cancelations, and warnings continue.  Italy closed schools nationwide (following Japan’s example).  Health workers in the UK and Italy have now tested positive.  Italy will apply to the EU to suspend EU budget rules due to the costs of the outbreak.

Overnight, Asian markets were strongly green Thursday.  However, Europe is strongly red across the board so far today.  As of 7:30 am, U.S. futures are still volatile, but deeply red again, point to a gap lower of more than 2%.

Thursday’s major news includes Weekly Initial Jobless Claims and Q4 Nonfarm Productivity (both 8:30 am), Jan Factory Orders (10 am) and a trio of Fed speakers.  Major earnings reports are limited to KR before the open and COO, COST, and HRB after the close.

Gap and volatility continue to be the buzzwords. You need to keep asking…Is there really a good reason for you to be trading markets that are more wide-ranging, more volatile, and less consistent than they have been in literally years?  Are you chasing the “action,” reacting to emotion, or scrambling to somehow get back to even?  If so, think twice.  That is probably not a river you should be swimming across.  Trading is a business, cash is a valid position, and consistent, effective trading is the goal.  This day, this week or even this month will not make the difference between a successful trading year (let alone lifetime) either way.  Good trading is good risk management.  The bottom line continues to be…be careful.

Ed

Swing Trade Ideas for your watchlist and consideration: SNDL, GBT, ADBE, TNDM, TZA, SQQQ, SPXU, SDOW, SOXS. Trade smart, take profits along the way and trade your plan. Also, don't forget to check for upcoming earnings. Finally, remember that the stocks/etfs 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.

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🎯 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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