Markets made a modest gap higher on Friday after the March Payrolls report came in with fewer jobs added than expected. However, it makes the 11th straight month of more than 400k jobs added, the participation rate is essentially where it was pre-pandemic, and the unemployment rate fell to 3.6%. After the open stocks meandered their way back down to the lows at about 1:30 pm before an afternoon rally took all 3 major indices back up off the lows. This left us with black Hammer-type candles in all 3, although you could make a strong argument for a Doji in the DIA. All 3 are close to their T-lines as of the close, after testing that level. On the day, SPY gained 0.28%, DIA gained 0.34%, and QQQ lost 0.20%. The VXX fell 2.6% to 25.03 and T2122 climbed back just outside the overbought territory to 75.53. 10-year bond yield retreated during the day but still closed up at 2.371%. It is worth noting that both the 2s vs 10s and 5s vs 30s bond yields are inverted, which is broadly seen as an indicator that there will be a future recession. Oil (WTI) fell seven-tenths of a percent to $99.56/barrel as the UK followed President Biden’s example and announced they will be releasing oil from their strategic reserves as well.
On Friday, the Labor Relations Board announced that Staten Island NY AMZN workers voted in favor of a union (with not enough disputed votes to flip the vote). The re-vote in Bessemer AL is still undecided with the company ahead in the voting, but over 400 votes now going to a ballot dispute process. Meanwhile, in Congress, the House voted to decriminalize marijuana nationally, expunge marijuana conviction records, and levy a tax on marijuana sales (starting at 5% and eventually moving to 8%). This sends the bill to the Senate where passage will be more difficult to get passed. Elsewhere, on Saturday TSLA announced that they had delivered a record 310k cars during Q1.
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TWTR shares spiked as much as 30% in premarket trading after a 13G public filing revealed that Elon Musk has acquired a 9.2% stake in the company. That purchase makes him the largest outside shareholder in the company. However, this purchase was classified as a “passive stake” in the company. Nonetheless, shares are spiking at the prospect of him buying more or taking an active role. His purchase comes less than two weeks after Musk criticized the company over its acceptable speech policies and then conducted a TWTR poll on whether the company adheres to free speech principles and what should be done about it.
On the Russian invasion story, over the weekend it was announced by both sides that the negotiations have progressed to a point where a meeting between Putin and Ukrainian President Zelensky makes sense. This meeting will take place in Turkey in the unspecified not-too-distant future. However, then Sunday, Russia announced that negotiations have not arrived at that point and their original positions still stand. So, this is either negotiating tactics or disarray between the Russian negotiation team and the Kremlin. Meanwhile, several mass graves and evidence of Russian war crimes emerged in liberated regions over the weekend. On Sunday the EU warned they are likely to levy additional sanctions over those crimes. However, the sanction threat again stops short of blocking ALL Russian banks from the SWIFT payments system or stopping the flow of Russian Gas and Oil to Europe
Overnight, the Asian markets were mostly green. India (+2.17%), Hong Kong (+2.10%), and Shanghai (+0.91%) led the region higher while Taiwan (-0.38%) and New Zealand (-0.30%) were the most appreciable losers. In Europe, stocks are leaning to the upside at mid-day. The FTSE (+0.21%), DAX (+0.16%), and CAC (+0.17%) are lagging, but as always far exceed the rest of the continent in volume. Switzerland (+1.09%) is an outlier to the upside as is Denmark (-1.30%) to the downside in early afternoon trading. As of 7:30 am, US Futures are pointing toward a modestly green start to the day. The DIA implies a +0.05% open, the SPY is implying a +0.19% open, and the QQQ implies a +0.40% open at this hour. 10-year bond yields are modestly higher to 2.39% and Oil (WTI) is up less than 50 cents in early trading.
Major economic news scheduled for release on Monday is limited to Feb. Factory Orders (10 am). There are no major earnings reports scheduled for the day.
The economic news later this week includes Imports/Exports, Feb. Trade Balance, Mar. Services PMI, ISM Non-Mfg. PMI, and a couple of Fed speakers all on Tuesday. Wednesday is limited to Crude Oil Inventories and Feb. FOMC Minutes. Thursday brings Weekly Jobless Claims and 4 different speeches from 3 Fed members. Friday will also be limited to the WASDE global agriculture report.
April is statistically the best month for stocks and it starts off with a week of little news and very light earnings activity. MS made a point this weekend to tell their customers they believe the “bear market rally” is now over. JPM’s Jamie Dimon seems to agree, saying that the confluence of inflation and the war in Ukraine creates a dramatic increase in market risk. Still, stocks are up 10% from the lows and have been very strong since mid-March. Volatility has plateaued off recently, but is still far off the lows and remains a concern. Many eyes will be on the interest rate inversions (and the implied future recession) as well as how the Fed is going to get from here to where they end up on rates. With all that said, it is probably time to be back in the market, perhaps on both sides, and cautiously riding the trend. Just be prepared for volatility-caused short-term pain and watch that herd mentality.
The first rule of making big money in the market is to not lose big money in the market. Don’t be stubborn, and protect yourself from yourself. If you are wrong, just admit it and take your loss. Stick to those trading rules and manage the things that you can control while trying not to worry about the things you have no control over at all. Trade with the trend, don’t chase, keep consistently taking profits when you have them, and move your stops in your favor. Trading is a marathon, not a sprint. So, focus on the process and enjoy yourself.
Ed
Swing Trade Ideas for your consideration and watchlist: TWTR, EYE, CELH, PSFE, SPT, AIZ, PLTK, AUY, AAPL, MSFT, LLY, DBX, IWM, ZBH, BMY, JNJ, FCX. 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.
🎯 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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