Monday a fairly blah day except for oil.  Oil had been pounded again the previous night, led markets to gap down and then was relentlessly pounded all day.  For the first time ever, oil (May contract that expires Tuesday 4/21) traded negative, and not just a little negative.  At one point, WTI was trading at -$40/barrel and it closed at -$31.37/barrel.  This pressure held the bulls down and all the major indices closed near the lows of the day.  The SPY lost 1.73%, the DIA lost 2.39% and the QQQ lost 1.18%.  The VXX closed up almost 10% to 42.84 and the 10-year bond yield fell slightly to 0.616%.  However, it was Oil (WTI) that stole the show, down an incredible 171% on the day.

The story behind oil is that every tanker, tank, dry well, and bucket of available storage has been filled.  However, the tankers on their way from Saudi Arabia (yes we still import every day) can’t just stop and all the US shale wells can’t be turned off either.  It turns out, that in addition to other short-comings, if you stop pumping a fracked well, it immediately starts degrading, meaning it will take even more fracking to get that well back to normal production later.  So, shale producers would rather pump it at a loss than shut down their oil fields.  The problem is, with nowhere to put that oil, this drove the front month contract deeply negative.  So, those losses per barrel are very steep now. And while the June contract still has another month to find someplace to pour the oil, price is still falling and nothing but a complete stop of supply or massive pick-up in demand will change this, with neither likely happening except very gradually.

On the Virus front, after the close, a study was published that found “much more widespread” antibodies (people who have had or now have the virus) in Los Angeles County than previously estimated.  While great (to find the virus less deadly than expected), the study still found only 4% of the adult population had antibodies.  This means 96% have not had the virus yet and are still at risk, plus we are unsure of how well or even if people who do have the antibodies are protected from reinfection.  So, this is maybe good news, but we don’t know how much.  

The global virus headline numbers are 2,498,999 confirmed cases and 171,334 deaths.  At the same time, in the US we now have 792,938 confirmed cases and 42,518 deaths. Several states have started easing restrictions, under pressure from those who feel the who pandemic is overblown. Some opening up in spite of not meeting the guidelines. However, Dr. Fauci (NIH) again warned protesters Monday “Unless we get the virus under control, the real recovery economically is not going to happen.” So, the question remains open as to whether the trillions of dollars spent on the bailout and the month of time lost to lockdown will end up wasted by allowing the virus spread to resume at pace.

On the small business bailout front (bill 3.5), negotiations continue, but no deal has been reached as of Monday evening.   The sticking point seems to be that the White House will not accept $25 billion for testing in the bill and Democrats wanting money for state and local governments that the Republicans oppose.

Overnight, Asian markets showed us red across the board as oil prices continued to fall overnight (despite a $55 boost from rolling to the June contract).  In Europe, markets are also down about 2% across the board at this point in their day.  As of 7:30 am, US futures are pointing toward another 1%-2% gap lower. 

The major economic news for Tuesday is limited to Mar. Existing Home Sales (10 am).  However, on the earnings front, KO, CMA, DOV, EMR, FITB, HCA, LMT, NTRS, OMC, PCAR, PM, PLD, SNA, SYF, and TRV all report before the open.  CMG, CB, NFLX, and TXN report after the close.

The uptrend remains in place, but Monday’s candles were ugly, as well as gaps and volatility are still the norms.  Optimism seems to be the rule lately.  However, we are in earnings season and there will continue to be a stream of both bad economic news and good virus-hope news.  So, traders need to continue to be very attentive, and either be very fast (day trade) or very slow (long-term holds).  Be very cautious about any swing trades you take in a news-driven market.

Ed

No Swing Trade Ideas for your consideration and watchlist for Tuesday. 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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