Markets gapped down about three-quarters of a percent on Friday.  However, after the open, all 3 major indices oscillated on the day with the SPY and QQQ ending up back above the gap in positive territory.  This left us with large gap-down white candles in the SPY and QQQ and a gap-down white Spinning Top candle in the DIA.  On the day, SPY gained 0.04%, QQQ gained 0.62%, and DIA lost 0.57%.  The VXX fell a bit to 18.45 and T2122 also dropped a bit but remained in the mid-range at 46.65.  10-year bond yields spiked to 1.793% and Oil (WTI) rose to $83.82/barrel.

Earnings season is continuing to get into high gear.  This morning, BK, SBNY, and TFC all beat on both lines.  PNC beat on earnings but missed slightly on revenue.  However, the big news was that GS posted a massive miss on earnings, even with a huge beat on revenue. SCHW doesn’t report until after 8:30 am.

On Sunday Reuters reported that the oil market continues its recent tremendous rally as three factors have come into play.  First, outages (and threatened outages) from such places as Oman, UAE, and Russia’s far-east as well as fears of outages in politically torn Kazakhstan forced buyers to look elsewhere, driving up the price of supplies from the west.  Secondly, the impact of the omicron variant had been over-estimated by market participants, meaning demand remained more robust than was expected in December.  Finally, US and Canadian inventories have fallen to the lowest level since October 2018 (as a result of number two).  All of which have added buying pressure to western Oil markets.  In the last week, large integrated oil and gas names have spiked.  Among the winners on the week were BP (+7.99%), PBR (+14.53%), XOM (+4.34%), CVX (+3.14%), and RDS.A (+5.88%). 

The PBOC (Chinese Central Bank) released data overnight that showed the country’s “Digital Yuan” (cryptocurrency) added 261 million users in the last 6 months of 2021.  However, the total transactions over those 6 months were only worth about $8.3 trillion. As a reference, the country’s Alipay (phone-based payment system) accounted for almost $1.6 trillion in transactions during that same period.  You will need to decide for yourself whether this is good or bad news for crypto names.

Overnight, Asian markets were mostly lower.  India (-1.07%), Thailand (-0.99%), and South Korea (-0.89%) paced the losses.  Only Shanghai (+0.80%) and Shenzhen (+0.19%) showed green.  In Europe, markets are red across the board at mid-day.  The FTSE (-0.59%), DAX (-1.01%), and CAC (-1.03%) are typical of early afternoon trading in the region.  However, Russia (-4.70%) is a massive outlier to the downside (perhaps on tensions related to Ukraine and specifically gas and oil flows to Europe).  As of 7:30 am, US Futures are pointing toward a red start to the week.  The DIA is implying a -0.70% open, the SPY implies a -1.04% open, and the QQQ implies a -1.64% open at this hour.  10-year bond yields are also spiking to 1.818% and Oil (WTI)is up another 1.46% in early trading.

The major economic news scheduled for release Tuesday is limited to NY Fed Empire State Mfg. Index (8:30 am).  However, earnings season is back in gear with pre-market reports from BK, GS, PNC, SBNY, SCHW, and TFC.  Then, after the close, CNCX, IBKR, and JBHT report.

The Fed’s hawkish turn continues to spook markets and huge increases in energy prices weigh on general business and market sentiment. It looks like we are headed to test the recent lows again this morning. So, the bears clearly have the momentum in what is shaping up to be a rough January. Expect the rotation toward safety to continue with Oil and mega-cap non-cyclical names faring best. Keep in mind that even though the direction is bearish, intraday whipsaw volatility remains likely. In short, trade carefully.

Stick to your trading rules and on managing the things you can control. Don’t chase, trade with the trend, keep consistently taking profits when you have them, and move your stops in your favor. And keep in mind that the first rule of making a lot of money in the market is to not lose a lot of money in the market. So, don’t be stubborn. When you’re wrong, just admit it and take your loss. (That’s why we set stops.)

Ed

Swing Trade Ideas for your consideration and watchlist: SQQQ, SPXU, XOM, BTU, CG, ILMN, TGT, F, AMAT. 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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