Maybe a Rest After The Run

Wall street ignored surprisingly low ADP payroll data as the bulls gapped markets higher on Wednesday.  The large-caps saw the bulls follow-through on the gap and run hard all day.  Meanwhile, the QQQ sold off hard all morning (after the gap), but then also rebounded hard all afternoon.  On the day, the DIA was up 1.54%, the SPY up 1.45%, and the QQQ up 0.95%.  Once again the SPY and QQQ ended at all-time high closes and the DIA is now tantalizingly close as well. VXX also gained to 27.94 and T2122 is back just outside the overbought territory at 79.45.  10-year bond yields were down sharply to 0.648% and Oil (WTI) also fell nearly 3% to $41.58/barrel.

The non-partisan Congressional Budget Office reports that the federal budget deficit is larger than the economy for the first time since World War II.  The deficit is projected to be $3.3 trillion.  This comes as the Fed and Treasury say much more stimulus is urgently needed and the two parties are split on how much to give (Democrats at $2.2 trillion, Republicans at $1.1 trillion and some of GOP wanting just $500 billion and then to argue about the rest later).

UAL followed up its threat to lay off 3,200 pilots from last week. Now they announced 16,000 jobs will be cut next month. This came on top of AAL saying they would cut 19,000 jobs as soon as government aid ends. The industry says they need another $25 billion in aid to avoid the cuts and hold the industry together to March. However, analysts also say travel may not recover for multiple years. So, this may be just delaying the cuts.

On the virus front, in the US, the numbers show we now have 6,291,032 confirmed cases and 189,991 deaths.  New cases are back to the elevated flattened curve average of 42,000, but deaths remain above the 7-day average at 1,090.  During the Day Wednesday, Dr. Fauci (NIH) told Congress that the daily new case number is unacceptably high going into Labor Day weekend and the pled with the public not to behave carelessly as all too many did on Memorial Day and July 4th, which led to the summer case spike.

Globally, the numbers rose to 26,209,390 confirmed cases and 868,034 deaths.  The UK announced $665 million for a rapid-testing program.  This comes after scientists told the UK Government that due to testing delays, the scientists estimate the UK is only identifying about 7% of total cases entering the country in travelers.  In India, the spread continues to rage as they reported the largest single-day new case count that has been seen anywhere (83,337).  However, on the bright side, South Korea saw the lowest number of new cases in the last two weeks today.

Overnight, Asian markets were mixed, with Japan and South Korea higher while China and Hong Kong paced the losers for the day.  However, Europe is leaning heavily to the bullish side at this point.  The CAC is up 1.82%, the DAX up 1.23% and the FTSE up 0.66% at mid-day.  In the US, at 7:30 am, the futures are pointing to a red open with the DIA flat, SPY pointing to a modest -0.43% open, and QQQ looking at a gap down of 1.05% to start the day.  

The major economic news for Thursday includes Imports/Exports, Trade Balance, Weekly Initial Jobless Claims, and Nonfarm Productivity (all at 8:30 am), August Markit Composite PMI and August Services PMI (both at 9:45 am), August ISM Non-Mfg. Employment and August Non-Mfg. PMI (both at 10 am).  Major earnings reports include GMS, MIK, PDCO, SIG, and TTC before the open.  Then after the close AVGO reports.

The bulls continue to run, but extension from averages is significant. So, as tempting as it might be, don't predict reversals...follow the trend. And remember not to chase moves you have missed, because there will be another one any minute.  Stick with your rules and consistently lock-in profits and reduce your risk. 

Ed

The Daily Swing Trade Ideas for today: LKQ, IT, ALLY, YUM, MXIM, ABT, NLOK, MDT, MRK, UPS. 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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