Markets gapped slightly lower Thursday on the news that we have had over 30 million new unemployment claims in the last 6 weeks (3.84 million this week) and consumer spending had fallen 7.5% year-over-year in March.  After that half percent gap down markets ground sideways and then lower to close about twice as far down as the open on indecisive candles. The SPY fell 0.93%, the DIA fell 1.31%, and the QQQ was flat at down 0.04%.  The VXX gained a bit to close at 37.87 and the TC2122 4-week High-Low Ratio fell slightly to still overbought 91.09.  10-year bond yield rose to 0.646% and Oil (WTI) jumped almost 27% to get back to $19.09/barrel.

After hours, the Justice Dept. said they are seeing initial indications of fraud in the SBA Payroll Protection Program and that it has begun an investigation.  Elsewhere, CA, NY, TX, IL, CT, and MA states have all applied for federal loans as their unemployment trust funds are running out of money.  These are among the 21 states that are now below federal recommended solvency guidelines.  CA, TX, NY, IL, OH, HI, and PA are all below half of the recommended minimum solvency.

On earnings, AMZN told shareholders they may want to take a seat before reporting a huge miss ($5.01 act. vs. $6.25 est.) on higher than expected revenue.  It also said the company expects to spend all operating profits from Q2 on COVID related expenses.  However, AAPL reported an earnings beat on flat revenue, but dropped guidance and said it had also burned through some of its massive cash hoard during the quarter. (iPhone revenue was down 7% year over year.)

On the Virus front itself, the global headline numbers are 3,325,957 confirmed cases and 234,501 deaths.  In Russia as numbers climb the PM (theoretically President Putin’s number two) has tested positive.  At the same time, UK PM Johnson said his country was “past the peak,” but he did not want to risk a second peak and was thus not ready to announce a roadmap to lift restrictions and he will ask the public to wear masks when they do open.

In the US, we have breached the million-case mark, with 1,095,304 confirmed cases and 63,871 deaths.  Despite these numbers, 31 states will be at least partially open by this weekend.  However, Dr. Fauci says he is worried that states are moving too fast and large portions of the public are also not following distancing guidelines.  At the same time, the White House has not signed off on CDC guidelines that require altered ways of life.  Instead, the President said he wants things to be “the way they were” because he doesn’t want half-empty restaurants, stadiums, or other businesses.  Time will tell, but that approach does not model well.

Overnight, both Asian and European markets were closed for the May Day worker celebration.  However, the US will be open and as of 7:30 am, US futures are pointing to a significant gap lower at the open. 

The major economic news for Friday is limited to Apr Mfg. PMI (9:45 am) and ISM Mfg. PMI (10 am).  In earnings, ABBV, AON, CBOE, CHTR, CVX, CLX, CL, EL, XOM, HON, HUN, IMO, JCI, LYB, NWL, PCG, PSX, and WY all report before the open.  Only BRK.B reports after the close.

The uptrend continues with even down days being nothing but black candles in an uptrend.  However, profit-taking after window-dressing April may be in-store today. The bulls clearly continue to focus on the good (and hope) and ignore the bad news.  Still, gaps and volatility remain the norm and we should expect bad economic news to continue.  All we can do is remain focused and trade the chart in front of us.  Just bear in mind we either need to be fast (day trade) or slow (longer-term holds) in a market that does not match the data.  Be very cautious about swing trades, unless you can handle significant short-term pain.  Finally, it is Friday.  So, take some profits and reduce your risk going into the weekend ahead. 

Ed

No Trade Ideas for today 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.

🎯 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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