Markets gapped down about a percent on Friday morning.  Then with the quadruple witching, volatility reigned.  After the gap down, the large-caps put in a whipsaw day along the opening price before closing near the lows.  However, the QQQ rallied, more than closing the gap before it started its volatile ride.  Again, the tech stocks ended up closer to the lows than the highs of the day.  The SPY and QQQ indices both printed indecisive candles with large upper wicks, but the DIA printed a large-body black candle.  On the day, SPY lost 1.41%, DIA lost 1.62%, and QQQ lost 0.50%.  The VXX rose 3% to 21.97 and T2122 rose just outside the oversold territory to 21.05.  10-year bond yields fell to 1.404% and Oil (WTI) lost almost 3% to $70.34/barrel.  

Covid has come back as a major business issue again. In the UK, the Mayor of London said that more Covid restrictions are inevitable after declaring a major incident as both cases and hospitalizations spiked in the city. The UK government is debating another lockdown. However, in the Netherlands, the debate is over as they went back into lockdown until mid-January.  France and Italy have begun discussing their own options in this regard. If there is a silver lining, it is that the corporate world now has a lot of experience dealing with remote work, mask requirements, and the loss of manpower due to illness/quarantine.

GS cut their US economic forecasts significantly this morning as a result of the last week’s political drama.  They have lowered Q1 by 1% (to +2%), Q2 by half of a percent (to +3%), and Q3 by 0.25% (to +2.75%).  This comes amidst the backdrop of 7% inflation and is the result of new expectations that President Biden’s domestic economic spending is now dead.  (Following Dem. Senator Manchin’s declaration, that he would not vote for that spending.)  

Overnight, Asian markets were red across the board.  India (-2.18%), Japan (-2.13%), and Shenzhen (-2.01%) led the losses as omicron fears and the divergence of Chinese easing from Western tightening took root.  In Europe, we also see red across the board at mid-day.  The FTSE (-1.07%), DAX (-1.69%), and CAC (-0.99%) pace the continent as usual, but losses are widespread and strong as of early afternoon.  As of 7:30 am, US Futures are pointing to the US following the rest of the world lower.  The DIA is implying a -1.02% open, the SPY implies a -1.14% open, and the QQQ is implying a -1.33% open at this hour.  10-year bond yields are lower (1.385%) and Oil (WTI) is down over 3% in early trading.

There is no major economic news scheduled for release Monday.  The major earnings reports scheduled for the day are limited to CLL before the open.  Then after the close, NKE and MU report. 

Welcome back to a short, likely low volume, and potentially whippy pre-Xmas week. US markets look like they want to test the early December low this morning. Keep an eye on volatility and don’t forget that volume is likely to dry up as the week goes on.

Stick to your trade rules and on managing the things you can control. Trade with the trend, keep consistently taking profits when you have them, and move your stops in your favor. When you’re wrong, admit it and take your loss. (That’s why we set stops.) Trade carefully, and continue to think twice before holding through earnings…especially without a hedge in place.

Ed

Swing Trade Ideas for your consideration and watchlist: VZ, NEM, IBM, DRI, LEG, SBUX, BBIG, CRSP, BAC. 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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