Markets opened mixed and flat Tuesday as Earnings season kicked off. However, the large-caps saw a slow selloff lasting all the way to the lows about 3 pm. Then a rally the last hour closed the DIA and SPY up off their lows, both printing Bearish Harami candles. Meanwhile, the QQQ gapped up almost two-thirds of a percent but immediately sold off below Monday’s close. Then an all-day roller coaster ride ended up with price closing almost exactly where it closed Monday. On the day, QQQ was flat -0.00%, DIA down 0.60%, and SPY down 0.65%. The VXX rose slightly to 22.15 while T2122 fell back to the edge of the overbought territory at 80.17. Bonds began trading Tuesday after the holiday and fell to 0.729% as Oil (WTI) rose to $40.17/barrel.
On the stimulus front, Senate Majority Leader McConnell has had enough negotiations (he is not a primary negotiator anyway) and has said the Senate will vote on a small plan that essentially covers just the PPP business loan/grant program. However, any bill the Senate passes is very likely DOA in the House. Meanwhile, President Trump sent out another nebulous tweet urging Congress to “go big or go home” on stimulus (no amount or specifics mentioned). And House Speaker Pelosi has again told reporters the White House proposal falls significantly short of what is needed to address the crisis.
During the day, the big banks got hammered with C and JPM both printing big, ugly Bearish Engulfing candles. This came as both reported beats on both the top and bottom lines. BAC and WFC (which report Wednesday) also got caught in that selling. The other major stock news on the day was the AAPL iPhone announcement which includes a $100 price increase and adds 5G capability while also not providing a charging cable or earpiece. Finally, overnight, PPC agreed to pay a $110 million fine for Chicken price-fixing.
On the virus front, in the US we have now gone over 8 million cases, with the numbers showing we now have 8,093,600 confirmed cases and 220,900 deaths. The 7-day average daily new case count rose (about 1,000 increase) again to 51,691/day, while the lagging average of deaths remains relatively flat at 712/day. Prior to the open Tuesday, JNJ became the second to pause their Phase 3 Trial over another unexplained illness of a study participant. Then in the afternoon, LLY was forced to pause the trial of their antibody treatment (the one President Trump received) by US regulators over potential safety concerns.
Globally, the numbers rose to 38,426,539 confirmed cases and the confirmed deaths are now at 1,091,759 deaths. This comes as the world is adding 1 million new cases every 3 days. In the UK, despite the worsening situation, Cabinet Member Coffey said there is unlikely to be a national lockdown in the next 2 weeks, instead insisting the PM had decided to go with regional measures and local lockdowns in hope that will be enough to stop the spread. Meanwhile, in Germany, Chancellor Merkel is scheduled to release more restrictions later today.
Overnight, Asian markets were mixed, but mostly lower as the region reacted to a speech by Chinese President Xi Jingping. Japan and Hong Kong ended flat, with Shanghai, Shenzhen, and South Korea lower. The other Asian markets were mixed with only India (+0.72%) showing any appreciable gain. In Europe, markets are also mixed, but again mostly lower so far today. The big 3 bourses are all on the red side of flat with the only markets showing noticeable moves being the smaller countries as of mid-day. As of 7:30 am, US futures are mixed and flat with the DIA and QQQ just on the green side of even and the SPY just on the red side.
The major economic news for Wednesday is limited to Sept. Core PPI (8:30 am) and 4 Fed speakers (Clarida at 9 am, Quarles at 9:30 am, Quarles again at 3 pm, and Kaplan at 6 pm). Major Earnings Reports include ASML, BAC, GS, INFY, PGR, PNC, USB, UNH, and WFC before the open. Then after the close, AA, and UAL report.
Earnings are ramping up, the tea leaf reading of those numbers and statements follow, and stimulus talks (or lack thereof with Treas. Sec. Mnuchin out of the country), as well as political wrangling and the ACB confirmation hearings, will dominate the news. So, there is a lot of volatility risk overhanging the market. It looks like we are starting out looking at a consolidation day. However, that volatility can see us run either direction.
Continue to be careful, nimble, and potentially light in your trades. Make sure you lock-in profits whenever you can and maintain your discipline. Stick to those rules, follow the trend, and don’t chase moves you have missed. Just stick to those plans and they will serve you well.
Swing Trade Ideas for your consideration and watchlist: ABUS, OKE, XRT, KODK, XSPA, MRNA, SPCE, AMD. 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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