Monday was a volatile day with stocks gapping down 1% – 1.4% at the open on fears raised by the wildfire spread of a new virus strain in the UK.  However, not too long after the open, the dip buyers stepped in to lead a rally that lasted until 3pm.  A small selloff at the end of a day took us to an indecisive day with large wicks (especially in the SPY) and the potential news that support had held after the gap down.  On the day, the SPY was down 0.36%, the DIA flat at +0.08%, and the QQQ was down 0.37%.  The VXX was up almost 8% to 18.44 and T2122 fell back again to dead center of the range at 51.31.  10-year bond yields fell just a bit to 0.94% and Oil (WTI) was off 2.5% to $47.79/barrel.

Congress passed the relief bill Monday night.  Details of the $900 billion stimulus package were also released.  The bill will include a $300/week supplement to unemployment through mid-March, $284 billion ins small business PPP loan/grants, and a $600 direct payment to most Americans.  It also includes an extension to eviction prohibition through January, $8 billion in funding for vaccine distribution, $15 billion for airlines, $14 billion for transit systems, and $10 billion for state highways.  It will also give $10 billion in childcare assistance, $15 billion for entertainment businesses, and finally another $7 billion for broadband (although none of the telecom companies have ever delivered on the string attached to the hundreds of billions of previous grants).  The last major element of the bill was that it ends the Fed lending programs, stops the FOMC from starting similar programs, and takes back $429 billion previous allocated to the Fed to lend in the prior relief bills.  This last measure is key as it takes a huge buyer out of the corporate bond market as well as a low-rate lender.

In Europe (and especially the UK), the new strain of virus is adding to the Brexit trade concerns.  Since France is the primary gateway from the UK into the EU, the French-English border is crucial to trade.  However, the border between the UK and France was closed to contain the new mutation of the virus.  This leaves thousands of trucks, hundreds of railcars, and a large, but unknown, number cargo ships stacked up on either side of the border.  This coming about 10 days before a hard Brexit where trade between the two will swap to WTO tariff rates and trade rules.  So, what was expected to be a trade nightmare has come two weeks earlier than expected.  In the UK, they fear their food stocks are already being impacted, though we are not talking famine.

Related to the virus itself, US infections continue to rage as the US.  The totals have risen to 18,473,716 confirmed cases and 326,772 deaths.  The weekend saw another small reduction in new cases and deaths Monday, but the 7-day daily average remains 218,531 new cases and the average number of deaths rose to 2,665 deaths per day.  Related to the stimulus bill, airlines are promising to bring back furloughed workers when they get their aid, but UAL and AAL said the move would only be work through March unless more aid or a change in the amount of travel volume happens.

Globally, the numbers rose to 77,817,977 confirmed cases and the confirmed deaths are now at 1,711,508 deaths.  As a reference, the world is averaging about 642,000 new cases and almost 11,500 new deaths per day.  In Asia, the outbreak at a Thai seafood market that rocked their stock exchange Monday doubled again today (to 1,000 cases after months on none).  India and Australia have now locked down individual provinces.  In South Korea, the government has curtailed Christmas celebrations by declaring a “special quarantine period.”  However, its not all bad news as Singapore has now received its first shipment of the PFE-BNTX vaccine.

Overnight, Asian markets leaned heavily to the red, but Thailand and India bucked the trend after an awful Monday session.  Japan (-1.04%), Shanghai (-1.86%), and Shenzhen (-1.76%) were typical for Asian exchanges.  However, in Europe, we see green across the board so far today.  Among the big 3 bourses, the FTSE (+0.30%) is an outlier, but the DAX (+1.06%) and CAC (+1.01%) are typical.  As of 7:30 am, US futures are pointing to a mixed open.  The DIA is implying a flat open of +0.05%, the SPY implying a slight move up at +0.24%, and the QQQ implying a small gap higher at +0.58%.

The major economic news on Tuesday is limited to Q3 GDP (8:30 am) and Conf. Board Consumer Confidence and Nov. Existing Home Sales (both at 10 am).  Major earnings reports for the day are limited to CTAS and KMX before the open.  There are no major reports after the close Tuesday.

With little economic news, the open will depend on how the market views the stimulus deal details versus fear over the impacts of the “new strain” of the virus. At least at this point, the bulls seem to have a slight upper hand. Remember that we expect lower volume as traders have either taken the week off or are perhaps leaving early this week. So, be careful in this holiday-shortened week.

Respect the trend, support and resistance, and price action. Focus on maintaining your trading rules. Keep booking those profits (and especially goals) when you have them…its all about base hits. Don’t let greed get in the way of you achieving goals. Success is built one trade at a time, not by trying to hit the lottery. In short, get rich slowly…one trade at a time, just consistently achieving goals.

Ed

Swing Trade Ideas for your consideration and watchlist: NIO, AAPL, ADMA, FAS, BAC, CLF, CRSP, GNRC, FCX. 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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