Markets saw a significant gap lower at the open Friday on the news of the President’s positive Covid diagnosis.  However, this gap was immediately faded by more than half as a roller coaster day between the prior close the and the gap-down open ensued.  By day end, all 3 major averages left large upper wicks and bodies at the lower end of the candle.  QQQ was a particularly ugly black-body candle as the FAANGM stocks all got hammered on the day.  At the close, QQQ was down 2.81%, SPY down 0.95%, and DIA down 0.48%.  The VXX gained 3% to end at 25.78 and T2122 (4-week New High/Low Ratio) jumped back up into overbought territory at 86.40. 10-year bond yields rose to 0.704% and Oil (WTI) fell again to $37.05/barrel.  This all said, the action for the week did break the streak of losing candles for the first time in 5 weeks.

Lost in the “Trump positive test” news cycle was a disappointing September Payrolls report.  While the Unemployment Rate did fall to 7.9% for the month, this happened mostly on a drop in workforce participation (almost 1.1 million people dropped out of the workforce and stopped looking for work) and there were also fewer than expected jobs created in September (660k new jobs versus 800k+ expected). So, combined with the previously reported drop in Personal Expenditures, the economic recovery appears to be weakening significantly and talk of a continuing V-shaped economic recovery is no longer consistent with the data.  However, a weakening economic recovery does not necessarily equate directly to a weakening stock market.

Regarding the stimulus negotiations, White House quarantines, a number of additional positive tests, and staff retesting and isolation protocols (given the incubation periods of the virus) undoubtedly added to the difficulty of negotiations.  However, the main stumbling block Friday continued to be that the two sides are far apart on key issues.  So, while many specific groups (like the airline industry) and the market in general all continue to anticipate more stimulus is imminent, no deal is yet in sight.  However, after the close Friday Senate Majority Leader McConnel said “they were getting closer” and then Saturday the President urged Congress to “GET IT DONE” (as if his negotiators had nothing to do with the process).

On the virus front, in the US, the numbers show we now have 7,637,066 confirmed cases and 214,615 deaths.  The 7-day average daily new case count continues to rise and is now back up to 43,804, while the average of deaths remains 736.  33 states have rising case counts, 26 have increasing hospitalizations, and 12 have increasing death counts due to the virus.  NYC has had to order another shutdown of businesses and schools in the 9 worst-infected zip codes of the city as test positivity has again reached 18% in some areas.   Even worse situations are happening in states across the country, especially the Northern half of the nation, like WI with 24% positive tests, but the South is not spared as MS reached 42% test positivity this weekend (which is noteworthy because their Governor just ended the MS mask mandate).

Globally, the numbers rose to 35,437,479 confirmed cases and the confirmed deaths are now at 1,042,344 deaths.  In France, has raised the alert level to maximum in the region around Paris, ordering the closing of bars again in that area as restrictions will last 15 days.  Elsewhere in Europe, cases are surging even more in the UK, where PM Johnson warned the British people to prepare for a rough winter ahead.  In addition, the British Health Minister prohibited mixing of families in any indoor setting for many cities in the north of the country (including Liverpool).  Both Germany and importantly Italy continue to report the highest new case count since April and Poland reported an all-time record number of cases for the third day in a row on Sunday.

Overnight, Asian markets were green almost across the board, with only two Chinese exchanges flat or down.  Australia (+2.59%), South Korea (+1.29%), and Japan (+1.23%) led the gainers.  In Europe, markets are green across the board so far this morning.  The Big 3 bourses are typical, with the FTSE up 0.83%, DAX up 0.74%, and CAC up 0.88%.  As of 7:30am, US futures are following Europe and pointing to a gap higher of two-thirds of a percent in the large-caps and eight-tenths in the Nasdaq apparently on reports or assumptions the President Trump’s health is improving.

The major economic news for Monday is limited to Sept. Service PMI (9:45 am) and Sept. Mfg. PMI (10 am).  There are no earnings reports scheduled on the day.

We all know that the market hates uncertainty and we already had plenty related to the virus, election, and stimulus.  This has been compounded over the weekend by uncertainty about the President’s health, as well as the White House gave us a steady stream political posturing, mixed messages, and outright lies about his treatment and condition. This was punctuated by him pulling a Sunday evening “drive by photo op” stunt for the nightly news cycle.  All this is to say, volatility continues as uncertainty reigns now. 

Personally, I expect a gap-up and then snap-back reaction this morning as over-reaction has been the norm for markets for some time.  Even with a gap-up, the only thing we can do is to trade the chart and right now that shows resistance above with no bullish trend yet in place.  So, we can either continue to sit on the sidelines or be very careful and quick in this market.  If you do trade, stick to your rules, follow the trend, and don’t chase moves you have missed.  Remember to keep locking-in profits, because it’s the singles and doubles that add up to championships, not the occasional home runs.

Ed

Swing Trade Ideas for your consideration and watchlist: INTC, BA, HD, TOL, NIO, BLNK, LB, URI, BIDU, DDOG, PNR 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.

Hit and Run Candlesticks / Road To Wealth Youtube videos

Disclosure: We do not act on all trades we mention, and not all mentions acted on the day of the mention. All trades we mention are for your consideration only.

Free YouTube Education  •  Subscription Plans • Private 2-Hour Coaching

DISCLAIMER: Investing / Trading involves significant financial risk and is not suitable for everyone. No communication from Hit and Run Candlesticks Inc, its affiliates or representatives is not financial or trading advice. All information provided by Hit and Run Candlesticks Inc, its affiliates and representatives are intended for educational purposes only. You are advised to test any new trading approach before implementing it.  Past performance does not guarantee future results.  Terms of Service