No OPEC Production Deal Keeps Oil Rising

Markets gapped higher Friday on blowout June Payrolls (+850k and accompanied with an increase in the unemployment rate) and then all 3 major indices slowly trekked higher at varying rates.  This left the SPY and QQQ with strong white candles and new all-time high closes.  Meanwhile, the DIA printed a nice white gap-up Spinning Top and also eked out a new all-time high close.  On the day, QQQ gained 1.15%, SPY gained 0.76%, and DIA gained 0.46%.  VXX fell slightly to 28.90 and T2122 actually closed in the mid-range at 69.06 (after being near 100 earlier in the day). 10-year bond yields fell sharply to 1.431% and Oil (WTI) was flat at $75.20/barrel.

Bloomberg reported Saturday that a massive ransomware attack has hit more than 1,000 companies.  While the list of victim companies continues to expand, so far it appears the targets have been small-to-medium-size companies who use IT service providers.  The service providers (gateway for attack) include SNX, a major (and listed) provider out of Miami. 

OPEC+ voted to increase production by roughly 400,000 barrels per day each month for the remainder of 2021 (starting in August) and extend the rest of the production cuts that are in place through the end of 2022.  (Analysts had expected the number to be about +500,000 barrels/day.)  However, UAE rejected both proposals that block them from taking place.  After 2 days of negotiations, talks broke down Monday. No date has been set to resume negotiations, but in the meantime, the OPEC+ meeting scheduled for Tuesday has been canceled.  Analysts see oil prices rising in the short-term if OPEC+ fails to reach a deal, but future oil prices are uncertain without a deal as the group members may ramp up production in an effort to capture market share and fill budget deficits from last year.  Regardless, WTI Oil is up 1.5% to a 6 year high in the premarket.

Recent IPO DIDI, the Chinese ride-sharing giant that dwarfs UBER in China, is down sharply in premarket.  Late on Friday China announced it was forcing all app stores in their country to remove the DIDI app (while still allowing those who already have the app on their phones to continue using it).  This comes after the Chinese regulators had “advised” the company to postpone its US listing…and the company did not heed that advice.  The reported problem is that the Chinese government needs to “review DIDI app network security.” As of 7:40 am, DID was down 18% from Friday's close.

Overnight, Asian markets mixed on mostly modest moves.  Singapore (+1.58%) was an outlier, with South Korea (+0.36%), Shenzhen (-0.35%), and Hong Kong (-0.25%) being more typical.  In Europe, the day has also started mixed.  While most of the smaller exchanges are modestly, but firmly green at mid-day, the FTSE (-0.20%), DAX (-0.39%), and CAC (-0.32%) are just as firmly in the red.  As of 7:30 am, US Futures are pointing to a mixed and flat open.  The DIA is implying a -0.11% open, the SPY is implying a -0.07% open, and the QQQ is implying a +0.09% open.

Major economic news scheduled for Tuesday includes June Services PMI (9:45 am), June ISM Non-Mfg. PMI (10 am).  There are no major earnings reports scheduled for the day.   

The OPEC+ negotiation breakdown (Saudi Arabia vs UAE primarily) is the main market driver this morning. Oil names continue to soar under the feeling that no deal by OPEC+ means that oil production caps will remain in place in the middle-east (leading to higher oil prices). However, the dollar is also up significantly this morning, which will have a muting effect on commodities. For what it's worth, Treasury yields are just on the red side of flat so far this morning, which would suggest the oil situation has not spawned greater inflation/Fed fear in markets yet.

Follow those trading rules and stick to the trade plan. The odds favor following the trend and, as always, respect both support and resistance levels. However, all trends reverse at some point and every S/R level is breached eventually. So, don't just assume trend, support, or resistance will always hold. Keep taking your profits, moving your stops, and maintaining your discipline. Remember that consistency is the key to long-term trading success. So, book those singles and doubles. Base hits win championships, not the occasional home run.


Swing Trade Ideas for your consideration and watchlist: DNMR, LKQ, OKE, RIOT, MARA, UBER, COP, JKS, ZNGA, BP, COF. 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.

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🎯 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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