Markets opened flat, rode the roller-coaster all morning, and then were calm all afternoon.  There was what appears to be a rotation underway, out of the mega-cap FAANG stocks that have led the rally since March and into the “big recovered economy” stocks such as Industrials and Energy.  On the day SPY was up 0.30%, QQQ was down 0.43%, and DIA was up 1.28% (on that rotation).  VXX fell once again to 25.75 and T2122 rose slightly to 97.34, deeper into the overbought territory.  10-year Bond yields rose to 0.58% and Oil (WTI) rose to $41.99/barrel. 

The President’s executive orders from Saturday seemed to be a non-story on Monday.  Uncertainty, likely legal challenges, and the limited nature of the orders made the focus stay on a bi-partisan deal.  Treasury Sec. Mnuchin said the White House was willing to put more money on the table, but reportedly made no new offers.  Democrats have not made another offer either after their “meet in the middle” $2 trillion deal rejected Friday.  Both sides said over the weekend (and again Monday) that they are ready to negotiate, but the sides have also not talked since Friday according to Mnuchin.

In related news, President Trump floated that he is again seriously considering doing a Capital Gains tax cut.  As with the Payroll Tax and to be charitable, it is unclear if he has the legal authority to cut taxes by himself. While he claimed this move would create a lot of jobs via reinvestment, he reportedly also decided against the action a year ago because it would not help the working class enough.  (For example, the top 1% of taxpayers had over 75% of the long-term capital gains last year per the IRS report.)  However, it is another stimulus idea under consideration.

On the virus front, in the US, the numbers show we now have 5,251,997 confirmed cases and 166,201 deaths.  In good news, for the first time in well over a month, there are less than 50,000 virus hospitalizations in the country.  This comes as the 7-day average of both new confirmed cases and deaths have leveled off after the very recent pullback. So, the front line of the fight is getting at least a little respite.

Globally, the number of cases rose above 20 million as it reached 20,281,373 confirmed cases and 739,770 deaths. In the early hours today, President Putin claimed their country had given regulatory approval for a Russian vaccine that had proven safe and effective.  In a jab at the west, they named this vaccine “Sputnik V” and Putin said they had ordered a billion doses for global distribution.  Markets popped on the news, despite widespread skepticism about the truth and science behind the claim.  Whether true or not, the news did give hope for the vaccine development underway in the UK and US.

Overnight, Asian markets were mixed again.  China and Taiwan led the losers this time, while Japan, Hong Kong, and South Korea led gainers.  However, in Europe markets are strongly green across the board on Russia-prompted vaccine hopes.  The FTSE is up 2.5%, the DAX up 2.6%, and the CAC up 2.7% so far today.  In the US, as of 7:30 am futures are pointing to a varying gap higher.  The DIA implied open is up 1%, the SPY up 0.62%, and the QQQ up 0.39% seemingly reinforcing the rotation from high-flying tech into mainstream recovery economy names. 

The only major economic news for Tuesday is July PPI (8:30 am) and a Fed speaker (Daly at noon).  Major earnings are also very limited to BR, SYY, and YPF before the open.  There are no major earnings reports after the close.

Markets continue their bullish march. With no major economic news and high spirits from the Russian vaccine approval, we may well see more upside run. However, beware that we are over-extended and that it appears a controlled (not desperate selling or buying, just methodical movement from one group to another) rotation is ongoing. So, don’t fight the trend, but remain aware that another pause or swing to the downside may come soon.  Keep your discipline and mind those trading rules. You put them in place for a reason (to help control emotion and avoid mistakes).  As always, follow the trend, don’t predict reversals or chase missed-moves, and take your profits along the way.  Remember, we just need to make our goals consistently. We don’t have to swing for massive gains on any one trade. 

Ed

The Daily Swing Trade Ideas for today: PLAY, HWM, DFS, NBL, FTI, F, XLE, TSN, WMT. 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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