On Monday, markets gapped slightly higher and then followed through the first hour of the day. However, at that point, we saw a strong selloff that lasted until about 2 pm when the lows were reached and markets ground sideways in a tight range the rest of the day.  This left us with black candles with larger upper wicks than lower wicks.  The SPY also became the last of the 3 major indices to print a death cross (50sma crossing below 200sma). On the day, SPY lost 0.74%, DIA gained 0.03%, and QQQ lost 1.92%. The VXX gained almost 10% to 28.92 and T2122 fell into the oversold territory at 13.27.  10-year bond yields spiked again to 2.142% and Oil (WTI) rallied after falling below $100 to close at $102.97 (-6.73%).

On the Russia story, the US and China held 7+ hours of intense talks Monday where the US was trying to “warn off” China from helping Russia to circumvent the Western sanctions.  An anonymous source told reporters after the talks that if China does materially support Russia, there will be consequences (sanctions) for China as well.  Then, overnight the Chinese Foreign Minister told his Spanish counterpart that “China is not a party to the conflict and wants to avoid US sanctions over the situation.” The EU also agreed to the 4^th set of sanctions on Russia, including matching the US by revoking the Russian “most favored nation” trade status.  In a surprise (and another hopeful) move overnight, 3 EU leaders (the Prime Ministers of Poland, Slovenia, and the Czech Republic) will travel to Kyiv, even as the Ukrainian capital is entering a 35-hour curfew amidst new Russian missile attacks.

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Among stocks, TSLA (-3.64%) took a big hit Monday after news broke that the company had been buying aluminum from Russia for the last two years.  Then overnight, TLSA hiked the price of all vehicles produced in the US.  The same holds true of Model 3 and Model Y cars made in China.  (The latter is notable because it was the company’s second price hike in the last week in that country.)

In other stock news, during the day yesterday, AAPL fell 2.66%, perhaps partially on the new lockdown in Shenzhen China (some AAPL components are produced in that major tech production city).  Then, after the close, MTN and CANO reported misses on both the revenue and earnings lines.

Even as the Fed meeting starts, President Biden’s set of 3 new Fed nominees has run into trouble.  Former Fed Governor and Deputy Treasury Sec. Raskin has been black-balled as a Vice-Chair nominee by WV Senator Manchin.  In his announcement, Manchin cited her previous “all-of-the-above energy policy” statements, which is code for her “support of green energy” and shows him voting the way that his coal, oil, and gas industry financial supporters prefer to send a political message.  Senator Manchin’s opposition to her likely kills her nomination.  This is a quite striking political move since there was no pretense he felt she was unqualified to be a Fed Member again and would have nothing to do anything related to national Energy policy. 

Overnight, the Asian markets leaned heavily to the downside, particularly in China.  Hong Kong (-5.72%), Shanghai (-4.95%), and Shenzhen (-4.36%) led the region lower.  In Europe, with the lone exception of Denmark (which is just on the green side of flat, the entire continent is in the red at mid-day.  The FTSE (-0.79%), DAX (-0.99%), and CAC (-1.01%) are leading stocks lower in early afternoon trading.  As of 7:30 am, US Futures are pointing toward a modest green opening ahead of economic news. The DIA implies a +0.23% open, the SPY is implying a +0.35% open, and the QQQ implies a +0.58% open at this hour.  10-year bond yields are down slightly to 2.131% and Oil (WTI) is plummeting downward (-8.13%) to $94.58/barrel in early trading.

The major economic news scheduled for release on Tuesday is limited to Feb. PPI and NY Empire State Mfg. Index (both at 8:30 am).  The major earnings reports scheduled for release before the open Monday is limited to DOLE.  Then after the close CAL, KODK, GOCO, and YY report. 

Intraday reversals and volatility continue to be the rule in markets. A sharp drop in oil prices overnight is just another example. (While unknown for sure, it could be that China signaling they won’t do anything to help Russia that would get them into sanctions could be cause for relief in Oil markets.) However, US markets may settle down Tuesday as traders wait for the actual Fed announcements before placing too many more bets. In any event, we’ve seen a lot of chop on decreased volumes lately as the trend remains bearish. So, continue to trade carefully. Also, be aware that the Chinese Covid lockdowns are spreading. Another major city (Dongguan) was placed in lockdown overnight. This came as the Chinese report a new spike in cases in 28 provinces. So, supply chain issues could get worse.

Remember that you don’t have to trade every day (or even week) and you definitely don’t need to chase gaps and moves. Trading is a marathon, not a sprint. So, stick to your trading rules and manage the things that you can control. Trade with the trend, don’t chase, keep consistently taking profits when you have them, and move your stops in your favor. The first rule of making money in the market is to not lose big money in the market. So, don’t be stubborn, and protect yourself from yourself. If you are wrong, just admit it and take your loss. (That’s why we set stops in the first place.)

Ed

Swing Trade Ideas for your consideration and watchlist: CLS, HES, BK, GT, DXC, FAST, BAC, LOW, DIS, WFC, XRT, HPE, CMCSA, ORCL, BNTX, MRNA, DGX. 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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Disclosure: We do not act on all trades we mention, and not all mentions acted on the day of the mention. All trades we mention are for your consideration only.

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