The bears sprung a massive bull trap on Thursday, with a 3% intraday reversal mid-day. Markets gapped higher and all 3 major indices followed through until about 11 am. At that point, the 3 were up 1.5-2.0% on the day. Then the bears sprung the trap and selling kicked in, continuing the rest of the day. It even accelerated to a sheer drop in the last 15 minutes of the day. This left us with big, ugly, black candles with large upper wicks in all 3 major indices. On the day, SPY lost 1.10%, DIA lost 0.88%, and QQQ lost 1.30%. The QQQ and DIA both fell through their 200sma, not finding support. VXX rose another 4% to 21.22 and T2122 dropped deep into the oversold territory at 1.41. 10-year bond yields fell to 1.811% and Oil (WTI) also fell three-quarters of a percent to $86.29.
PTON got more bad news Thursday. The company announced it has halted production of its bikes and treadmills as demand has fallen dramatically. On the day, PTON fell another percent and is now below the original IPO price. In reaction, PTON put out a pre-announcement this morning, saying they expect Q2 revenue will be within their previously released guidance range and that they are taking significant corrective action to improve profitability.
After hours, NFLX reported a beat on earnings and came in inline on revenue, but it also reported slowing subscriber growth and it forecast future growth slowing even further. As a result, NFLX fell 25% in post-market trading. In other earnings news, so far this morning ALLY, INFO, and SLB have all beaten on both lines. HBAN beat on earnings but missed on revenue.
Overnight, Asian markets were nearly red across the board, with only Hong Kong (+0.05%) hanging on to the green by the skin of its teeth. Australia (-2.27%), Taiwan (-1.75%), and Shenzhen (-1.19%) paced the region’s losses. In Europe, we see red across the board at mid-day. The FTSE (-1.07%), DAX (-1.78%), and CAC (-1.66%) are leading the region lower as fears of a Russia-Ukraine war and rising rates grip markets. As of 7:30 am, US Futures are pointing toward a down start to the day. The DIA implies a -0.29% open, the SPY implies a -0.56% open, and the QQQ implies a -0.91% open at this hour.
The major economic news scheduled for release Friday is limited to Leading Indicators at 10 am. Major earnings reports scheduled for before the market include: ALLY, HBAN, INFO, and SLB. There are no earnings reports scheduled for after the close.
After Thursday's afternoon selloff, fear is clearly gripping the bulls. We may be seeing capitulation selling as the correction picks up pace. So, be careful about chasing shorts. Just like chasing longs, that can be a dangerous approach in a volatile market. Also, don't forget it is Friday and we need to prepare for the weekend news cycle. In addition, Friday is payday...so take some profits if you have them.
Stick to your trading rules and on managing the things you can control. Don't chase, trade with the trend, keep consistently taking profits when you have them, and move your stops in your favor. And keep in mind that the first rule of making a lot of money in the market is to not lose a lot of money in the market. So, don't be stubborn. When you're wrong, just admit it and take your loss. (That's why we set stops.)
Swing Trade Ideas for your consideration and watchlist: AAPL, PENN, PLTR, DLTR, PM, XP. 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.
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🎯 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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