Keeping with the recent trend of volatility, today was the bulls’ day.  Markets gapped up and, after some whipsaw the first hour, then rallied all day before backing off the last hour in all 3 major indices.  This left us with large white candles with decent-sized wicks on both ends, which closed back up above the T-line in all 3.  On the day, SPY gained 1.83%, DIA gained 1.75%, and QQQ gained 1.68%. The VXX fell almost 6.5% to 24.96 and T2122 jumped to the edge of overbought territory at 89.43.  10-year bond yields spiked again to 1.903% as markets rushed back into risk assets and Oil (WTI) continues to scream higher, up another 7.8% to $111.52/barrel (a level not seen since 2008).

We may have gotten a “State of the Union address” pop or maybe it was a “Ukraine is not as bad as we thought” rebound at the open Wednesday.  Either way, the market also got boosts from Fed speakers.  James Bullard, a hawk, said the US economy is humming (“more than fully recovered”) and is unlikely to see a large impact from the invasion of Ukraine.  However, he also again called on the Fed to follow through on rate hikes and remove accommodation (rapidly sell off the balance sheet assets) said the Fed may have to get more aggressive if initial hikes do not curb inflation.  Fed Chair Powell also did not throw any curveballs.  He told Congress the labor market is extremely tight and still sees rate hikes coming in spite of the uncertainty that the War in Ukraine has injected into economic forecasts.  Reassuringly, he told Congress the likely path of increases will be in quarter-percent increments (alleviating market fears over the shock of half-percent moves).   

The Russian invasion continues to be the story driving markets.  On the ground, the Russian bombardment of the major cities has intensified and the Russian fleet is now approaching the major port city of Odessa.  The Pentagon says the Russian offensive is moving faster in the South of Ukraine compared to the North or East.  On the sanction front, the US and EU agreed to expand the list of Russian oligarchs being targeted by sanctions.  In addition, for the first time, EU Parliament discussion has now begun on whether sanctions need to be placed on Russian Oil and Gas imports, which has been totally off-limits up to this point.  However, energy makes up 60% of all Russian exports.  So, if you want to cause pain, that is what needs to be hit.  In other related news, two of the Bank of England policymakers told reporters that the war in Ukraine will upend the economic outlook in the UK and should therefore impact policy moving forward. 

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After the close, GEF, SPLK, PSTG, VEEV, VSCO, and NTNX all reported beats on both lines.  Meanwhile, JXN beat on earnings but missed on revenue.  On the other side, EC missed on earnings but beat on revenue.  However, CPNG and AEO missed on both earnings and revenue.

So far this morning, TD, SAFM, GMS, KRA, SRLP, and THNPY have reported beats on both lines.  CRH and BJ both beat on revenue but missed on earnings.  On the other side, WB and UTZ beat on earnings but missed on revenue.  However, BBY, BURL, and BIG all missed on both lines.

Overnight, the Asian markets were mostly green.  Shenzhen (-1.09%) and India (-0.65%) saw the only significant losses.  Meanwhile, South Korea (+1.61%), Malaysia (+1.28%), and Japan (+0.70%) led the rest of the region higher.  In Europe, with the minor exception of Denmark (+0.27%), the entire continent is in the red at mid-day.  The FTSE (-0.72%), DAX (-0.86%), and CAC (-0.08%) are typical of the spread across the region in early afternoon trading.  (The Russian exchange remains closed.)  As of 7:30 am, US Futures are pointing toward an open just on the red side of flat.  The DIA is implying a -0.09% open, the SPY implies a -0.18% open and the QQQ implies a -0.30% open at this hour.  10-year bond yields are trading lower to 1.854% and Oil (WTI) is up another 2% in early trading. However, a lot of economic news is still to come.

The major economic news scheduled for Thursday includes Weekly Initial Jobless Claims, Q4 Nonfarm Productivity, and Q4 Unit Labor Costs (all at 8:30 am), Feb. Services PMI (9:45 am), Feb. ISM Non-Mfg. PMI and Jan. Factory Orders (both at 10 am).  There are also 2 Fed speakers (Chair Powell testifies at 10 am, and Williams speaks at 6 pm).  The major earnings reports scheduled for before the open include BBY, BIG, BILI, BJ, BURL, CNQ, CPG, GMS, KR, REV, SRLP, TD, TTC, and WB.  Then after the close, AQN, AVGO, COST, GPS, MRVL, and VZIO report.

Markets seem to be waiting on economic data in the premarket. The worst of the fear from the invasion of Ukraine has subsided, the Fed speakers (especially Powell) have given us word that the rate increase pace will be slow and steady, and earnings are mostly behind us. Perhaps volatility will start to subside. However, do not just assume it has not gone away. Be prepared for whipsaw action when some news story drops (for example, what would be the impact if the EU did sanction Russian Oil and Gas?). Again we need to remain nimble (small), move cautiously, and keep a hedge (or exit plan) in place. So, don’t get giddy and start chasing.

Once again, ask yourself whether you have an edge in this sort of volatility. If not, sitting on your hands may be the best move you could make. Remember that you don’t have to trade every day (or even week) and you definitely don’t need to chase 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: ITUB, FFIV, TDOC, PINS, CHGG, CAR, PENN, PAAS, ZIM, PFE, SPCE, CVS, AAPL, CSCO, F, KHC, MSFT, PLUG, MARA, AG, FB. 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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