Monday saw a gap down of about 0.8% in the major indices.  However, shortly after this the bulls started a slow climb back into the game.  The day ended just on the green side of break-even in the large-caps while the tech-heavy QQQs led the way.  For the day, the SPY was up 0.28%, the DIA up 0.06%, and the QQQ was up 1.17%.  The QQQ also managed to print a bullish engulfing candle. At the same time, the VXX was down slightly to 40.26 and T2122 (4-week High Low Ratio) fell to exactly the mid-point between overbought and oversold territory at 50.  The 10-year bond yield was flat, technically closing down to 0.63 and Oil (WTI) continued its rally up over 7% to $21.18/barrel.

During the day the Treasury Dept. announced it will be borrowing $3 Trillion (bond sales) this quarter.  However, except for the exact number, this was expected due to the massive stimulus and relief packages already signed into law.  Meanwhile, the FDA said it will start to crack down on COVID-19 antibody tests.  In the panic to get tests to the public, over 250 antibody tests were taken to the market.  However, it has been reported that many of them give over 50% “false positives” (more than half the people who are told they have antibodies turn out not to have them).  This crackdown should start in the next 10 days and may well impact a number of medical sector tickers.

After the close, HTZ announced it has retained an advisor for help with bankruptcy proceedings.  LB also announced it had ended its deal to sell the Victoria’s Secret brand to a private equity firm.  Meanwhile, in supply chain news, earlier in the day TSN again warned of potential meat shortages despite an Executive Order forcing plants to remain open.  They cited US hog processing capacity having been cut in half.  After the close, SHAK confirmed by reporting they’ve seen significantly higher beef costs and expect the price hikes to continue.

On the Virus front itself, the global headline numbers are 3,663,961 confirmed cases and 252,758 deaths.  Reopening continues throughout Europe with mixed results.  While crowds waited on department stores to open in Austria, many Italian retail businesses said it wasn’t worth the effort to open shop since no customers showed up.  Germany reports a similar story as Italy on retail, but its manufacturing sector seems to be well on its way back to capacity.

In the US, we have 1,213,010 confirmed cases and 69,925 deaths.  A CDC report (marked with HHS and Homeland Security Dept. seals and dated May 1st) was leaked Monday.  The document said it expects to see virus spread and deaths accelerate by June with the mid-point of several forecasts being 200,000 new cases and 2,500 deaths per day.  The White House disclaimed the report saying it didn’t reflect any modeling done by the task force itself.  (For reference, the US now sees about 25,000 new cases and 1,200 deaths per day.)  Meanwhile, SBUX reports 85% of its stores nationwide will be open by Friday.  So, US reopening continues and at least we can get coffee while we argue over forecasts.

Asian markets of questionable value today.  China, Japan, and South Korea were all off for a market holiday Tuesday.  In Europe, markets are in the green across the board at this point in the day.  As of 7:30 am, US futures are pointing to a three-quarters to one-percent gap higher at the open. 

The major economic news for Tuesday includes Mar. Import/Exports (8:30 am), Apr. Services PMI (9:45 am), and Apr. ISM Non-Mfg. PMI (10 am).  Earnings before the open include D, FCAU, NEM, ITW, DD, SYY, INCY, MPC, REGN, SPG, TDG, AME, XYL, MLM, VTR, WRK, HSIC, AOS, IPGP, SEE, ALK, KEX, ACM, WRK, ADNT, USFD, ARMK, LDOS, HSIC, AGCO, W, INGR, TRI, TA, and AME.

The very recent pullback remains in place, but the bulls were in control all day (after the open) yesterday.  Volatility and gaps remain the standard.  However, it appears the bulls want to take us back up to at least retest resistance above after Monday’s bounce.  Focus on the chart in front of you.  Continue to be cautious about longer swing trades, unless you can take some short-term pain. 

Ed

Trade Ideas for your consideration and watchlist today: VLO, PNR, COP, ADP, TECK, PH, NXPI, GNTX, EMR, SIRI. Trade smart, take profits along the way and trade your plan. Also, don’t forget to check for upcoming earnings. Finally, remember that the stocks/etfs 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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