Markets gapped modestly lower on Wednesday.  Then after about an hour of roller-coaster action, all 3 major indices went into a selloff that lasted until a 3:30 pm rally that lifted stocks up off the lows.  This left us with indecisive candles in all 3, a Doji in the DIA, a black Spinning Top in the SPY and QQQ.  On the day, SPY lost 0.60%, DIA lost 0.22%, and QQQ lost 1.10%.  The VXX rose marginally to 25.00 and T2122 fell but remains in the overbought territory at 85.98.  10-year bond yields fell to 2.352% and Oil (WTI) rose 2.9% to $107.27/barrel.

Oil prices are plunging on reports that President Biden will make a huge release from the national oil reserves.  The release will be up to 180 million barrels, done at the rate of 1 million barrels per day for the next several months.  Brent fell 5.8% immediately on the news and WTI is down 5.7% in early trading for the same reason.  While this would have very material impacts on oil inflation immediately, it would not solve the structural problem (the US consumes more than our oil companies produce, with companies not willing or unable to expand production much beyond current levels in the short-term).

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On the Russian invasion story, despite Tuesday’s optimism due to Russian claims they would “radically reduce” operations in the area, the Russian shelling of areas around Kyiv and Chernihiv intensified Wednesday.  German Economic Minister Habeck said Wed. that Russia threatened to cut off the country’s gas supply unless they pay in Rubles.  He also said Germany has refused that demand (per existing contracts) and is taking precautionary measures in case Russia escalates the issue. (55% of Germany’s gas comes from Russia and Germany’s natural gas storage is currently 25% full, meaning they have a 20-day supply at the moment.) 

As we enter the last day of the quarter, markets have recently been experiencing a very strong run-up, led by the high-growth tech sector.  This is particularly odd since we are entering a tightening cycle that is expected to accelerate and inflation is a major drag on consumers who drive that sector.  This trend was challenged a bit on Wednesday by analysts’ fears about the strength of the personal computer market.  (As I have reported in the past, despite overall inflation, the prices of graphics cards and CPUs have been falling for months as supply has caught up to demand.  This means NVDA, AMD, and INTC (as well as their channel partners) can no longer charge 100% premium over MSRP for their products as they have for the last 2 years.  For this reason, MS and Barclays analysts have begun downgrading tech names.

Overnight, the Asian markets were mostly leaning to the downside.  Shenzhen (-1.19%) Hong Kong (-1.06%) and Singapore (-0.99%) led the way lower.  Meanwhile, South Korea (+0.40%) and Malaysia (+0.26%) were the only appreciable gainers on the day.  (It is worth noting that financial companies in Shanghai are paying their traders $300/day to live at their desks, thus keeping Shanghai markets open during the city’s 9-day lockdown.)  In Europe, markets are mixed but lean to the red side at mid-day with the notable exception of Russia, whose rigged game has their exchange up 6.11%.  The FTSE (-0.28%), DAX (-0.35%), and CAC (-0.62%) are typical of the rest of the continent.  As of 7:30 am, US Futures are pointing toward a mixed and flat start to the day.  The DIA implies a -0.10% open, the SPY is implying a -0.03% open, and the QQQ implies a +0.18% open at this hour.  10-year bond yields and Oil continue their extreme volatility, with yields down sharply to 2.318% and WTI down 5.73% to $101.63 in early trading.

Major economic news scheduled for release on Thursday includes Feb. PCE Price Index, Weekly Jobless Claims, and Feb. Personal Spending (all at 8:30 am), Chicago PMI (9:45 am), and a Fed speaker (Williams at 9 am).  The major earnings reports scheduled before the open are limited to WBA.  Then after the close, there are no major reports scheduled.

The news on a potential oil release in the US as well as some economic news in premarket will be the backdrop for the last day of the quarter. Beware more window dressing, although much of it may have already been done in the recent rally. Ukraine is still under siege and bombardment and their President Zelensky reports that Russia is now targeting agriculture as a way to increase pressure on both Ukraine (it’s one of their major industries) and the West who is backing them. (Russia and Ukraine combined account for about 40% of global wheat production.) With that said, we should continue to expect huge volatility (especially in energy markets) to continue to be the norm. The bulls still clearly have the momentum, but we’ve been in dire need of rest and are waiting on the February Payrolls Report on Friday. So, more rest may be in order, but don’t get complacent.

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 big money in the market is to not lose big money in the market. Don’t be stubborn, and protect yourself from yourself. If you are wrong, just admit it and take your loss. Stick to those trading rules and manage the things that you can control while trying not to worry about the things you have no control over at all. Trading is a marathon, not a sprint. So, focus on the process and enjoy yourself.

Ed

Swing Trade Ideas for your consideration and watchlist: BMQ, SPCE, FOXA, NIO, BBWI, DKNG, RH, DISCA, GRWG, QCOM, YETI. 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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