Markets gapped slightly higher at the open, in a counter-intuitive move to the Sept. Payroll Additions coming in less than half of expected (+194k vs +500k estimate).  At the same time, the Unemployment rate fell much further than expected (to 4.8%) as participation also dropped.  Regardless, despite the gap higher of about four-tenths of a percent, all 3 major indices immediately gave back that gap.  The large-cap indices spent the rest of the day in a roller-coaster ride to nowhere as markets chopped sideways.  However, the QQQ kept selling of until it started its own sideways chop in the early afternoon.  This left us with Bearish Engulfing candles of various sizes in all 3 major indices.  On the day, SPY lose 0.18%, DIA lost 0.03%, and QQQ lost 0.50%.  The VXX fell just under 2% to 24.79 and T2122 fell outside the overbought territory to 70.85.  10-year bond yields jumped up to 1.614% and Oil (WTI) gained 1.5% to $79.48/barrel. 

After the close, the Organization for Economic Cooperation and Development (OECD) announced a major breakthrough.  The 136 countries agreed to a global minimum corporate tax rate of 15%.  This includes the agreement of smaller “tax haven” countries like Ireland.  The breakthrough came after the countries agreed that the 15% rate will not be increased at a later date.  The deal will ensure that companies pay tax in the countries in which they operate rather than shifting money to a tax haven to avoid taxes by creative accounting. The new deal is scheduled to start in 2023, but some countries have work to do inside their own laws to implement the agreement.

On Sunday, GS cut their forecast for US economic growth for 2021.  Although it was a small cut (to 5.6% for the year versus the previous 5.7%), they also reduced the 2022 forecast substantially, from 4.4% to 4.0%.  The stated reason for the move was a delay in the recovery of consumer spending.  This may well be reflected in earnings reports that start again this week. They also cited their current assumption is that chip supplies will not recover until at least the second half of 2022.  The potential good news from this report was that they increased out-year growth forecasts based on a later recovery in consumer spending and removal of semiconductor shortage restraints from the economy.

LUV had a rough weekend.  The airline had to cancel more than 1,800 flights, well over 27% of its schedule.  The company blamed the disruptions on air traffic controllers and bad weather.  While LUV would not comment on whether staff shortages contributed to the outages, but the company has stated in the past that they have had trouble hiring enough new staff since the pandemic.  Oddly, in the same region of the country where LUV reported its outages, AAL only had to cancel 2% of their flights and SAVE only canceled 4% of its schedule. 

Overnight, Asian markets were mixed, with the majority of exchanges in the red, but the big movers on the green side.  Hong Kong (+1.96%) and Japan (+1.60%) were the winners on the day. The odd part of the Hong Kong rally was that Chinese Tech stocks surged higher even after a Chinese regulator slapped a $534 million fine on a giant food delivery app. BABA jumped nearly 8% on the Hong Kong exchange.  In Europe, stocks are also mixed, but lean to the red side at mid-day.  The FTSE (+0.32%), DAX (-0.36%), and CAC (-0.26%) are typical of the continent in early afternoon trading.  As of 7:30 am, US Futures are pointing toward an open lower.  The DIA is implying a -0.21% open, the SPY is implying a -0.38% open, and the QQQ is implying a -0.61% open at this hour.  However, the major overnight news is another huge rally in Oil.  The WTI is up almost 3.5% in early trading to $81.97.

There is no major economic news scheduled for release on Monday.  There are also no major earnings reports scheduled for the day.

The bears are starting the week with follow-through to Friday’s Bearish Engulfing signals, especially in the tech-heavy Nasdaq. Add to that the huge jump in Oil prices and we can expect a lot of fear in the markets at least early today. We also have earning season kicking off again, new inflation data, and a slew of Fed speakers later in the week. So, a bumpy ride is likely to continue. Be prepared for intraday volatility, gaps, and remember that the trend remains bearish.

Once again, bear in mind that you don’t have to trade every day or week. Either way, watch your current positions before looking to add trades. Remember that it is discipline and good trading rules that protect you from your own worst mistakes. So, focus on your trading process and managing the things you can control. Most importantly, consistently take profits when you have them. Don’t let greed get the better of you. Finally, remember that we have monthly options expiring at the end of the week. So, it’s time to think about closing, rolling, or riding into expiration with very little time value left.

Ed

Swing Trade Ideas for your consideration and watchlist: HUT, SOFI, BTU, GOTU, BEKE, SQQQ, ORCL, MRVL. 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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