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Virus Keeps Causing More Damage

March 6, 2020 by Ed Carter

The market continued its recent volatile, bearish ride Thursday. A strong gap down punished the bulls who chased into the prior day’s rally. However, it was also an unpredictable ride intraday. The buyers pushed markets up off the lows at the end of the day and left us with indecisive (wicks as long or longer than the body), black candles. On the day, the SPY fell 3.32%, the DIA was down 3.48%, and the QQQ was down 3.04%. The VXX jumped 16%, up to 26.68. Meanwhile, 10-year bond yields also fell to as low as 0.90% and Oil fell to $45.98/barrel (West Texas Intermediate).

As you know, coronavirus remains the main news story. The headline virus numbers have risen to over 100,000 confirmed cases and over 3,350 deaths globally. This includes over 15,000 cases outside China as the outbreaks in places like South Korea (6,600), Italy (3,900), Iran (4,750), Germany (550), France (425), Japan (360), and Spain (300) continue to expand. However, in China itself, recovery is starting to get underway as it is estimated 60-65% of their workforce (nationally, but not uniformly) have returned to work this week. As an example, 90% of Chinese Starbucks locations are open, albeit with reduced staff, hours, and reduced or eliminated seating areas.

In the US, virus cases now exist in 17 states, with 235 confirmed cases and the death toll has risen to 12. These numbers are expected to grow as we start to see broader testing in the US. (The Dept. of HHS expects to miss their goal of a million test kits distributed by the end of the week. However, there are still hundreds of thousands of more tests available now than last week.) Then again, maybe the spread of cases and deaths will just stop. President Trump disputes C.D.C. and W.H.O. statistics. He has a hunch that hundreds of thousands of cases simply recover on their own, without treatment, as those people just sit around or keep going to work, with only minor symptoms.

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Despite his hunch, we continue to see real impacts with a parade of closures, cancelations, and warnings. In addition, the US is starting to see certain shortages in some areas (i.e. face masks, hand sanitizer, toilet paper, and even some drugs). For example, the largest grocery chain (KR) is now limiting the number of cleansers, sanitary items, cold, and flu-related products any one customer can purchase. Meanwhile, in San Francisco, one of the infected cruise liners has been refused docking rights (with 2,500 passengers still on board) and is anchored off the coast as passenger testing and negotiations are underway to decide whether the ship can dock in that city. On the bright side of the outbreak, it appears that money (including significant foreign money) is piling into the US real estate market, as a safe haven. This point is reinforced by announcements that large banks are now reassigning significant parts of their staff to process loan applications faster. In China, the government has invoked “force majeure” for 4,900 companies, which invalidates contracts. (If a company had a Chinese supplier or customers, they may not now.)

Last night Jamie Dimon, CEO of JPM was hospitalized and had emergency heart surgery. He has been temporarily replaced by the company’s Co-Presidents. Also overnight, Asian markets were deeply red Friday. Europe is even deeper in the red, down about 3.5% across the board so far today. As of 7:30 am, U.S. futures are still volatile, but point to a gap lower of between 2.5% and 3.25% as of now.

Friday’s major news includes Avg. Hourly Earnings, Import/Exports, Feb. Nonfarm Payrolls, and Feb. Unemployment Rate (all at 8:30 am). There will also be half a dozen Fed speakers throughout the day. There are no major earnings reports scheduled.

Another gap, heavy volatility, and uncertainty is likely to reign again Friday. Even a two-day weekend represents a lot of headline risk with a global news story like COVID-19 underway. We could see a major increase in the spread, some kind of coordinated economic response or who knows what before the opening bell Monday. So, if you are trading at all, my advice is to be delta-neutral before the close today. Remember, cash is a valid position.

As Warren Buffett says, the first rule of making big money in the market is not losing big money in the market. In comparison, the loss of a day, week or even month of trading is a small price to pay to avoid being whipsawed to death. Successful trading means good risk management. Trading is a business, and consistent, effective trading is the goal. Don’t chase. Don’t trade on emotions. And plan every trade.

Sorry, no Trade Ideas for your watchlist and consideration today. Friday is payday. Take some profits. 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.

Hit and Run Candlesticks / Road To Wealth Youtube videos

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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DISCLAIMER: Investing / Trading involves significant financial risk and is not suitable for everyone. No communication from Hit and Run Candlesticks Inc, its affiliates or representatives is not financial or trading advice. All information provided by Hit and Run Candlesticks Inc, its affiliates and representatives are intended for educational purposes only. You are advised to test any new trading approach before implementing it. Past performance does not guarantee future results. Terms of Service

Looking at Another Gap Down This Time

March 5, 2020 by Ed Carter

My apologies upfront about today’s blog. I’m under the weather today and not quite up to speed.

Wednesday saw a strong gap higher and an all-day rally as markets apparently liked the idea of Joe Biden winning Super-Tuesday. The day closed very near the highs with the SPY up 4.20%, the DIA up 4.47%, and the QQQ up 4.17%. The VXX fell back to 23.00, but obviously still elevated.

Coronavirus remains the main news outside of the election results. The headline virus numbers have risen to 96,300 confirmed cases and over 3,300 deaths globally. This includes over 13,000 cases outside China as the outbreaks in places like South Korea (6,100), Italy (3,100), Iran (3,520), Japan (320), France (260), Germany (350), Spain (170), and the US (160) continue to expand. In the US, cases exist in 14 states and the death toll has now risen to 11. It is worth noting that Wuhan China is reporting an increase in relapse rates of previously cleared patients being re-admitted for symptoms and testing positive again.

In terms of impact, the parade of closures, cancelations, and warnings continue. Italy closed schools nationwide (following Japan’s example). Health workers in the UK and Italy have now tested positive. Italy will apply to the EU to suspend EU budget rules due to the costs of the outbreak.

Overnight, Asian markets were strongly green Thursday. However, Europe is strongly red across the board so far today. As of 7:30 am, U.S. futures are still volatile, but deeply red again, point to a gap lower of more than 2%.

Thursday’s major news includes Weekly Initial Jobless Claims and Q4 Nonfarm Productivity (both 8:30 am), Jan Factory Orders (10 am) and a trio of Fed speakers. Major earnings reports are limited to KR before the open and COO, COST, and HRB after the close.

Gap and volatility continue to be the buzzwords. You need to keep asking…Is there really a good reason for you to be trading markets that are more wide-ranging, more volatile, and less consistent than they have been in literally years? Are you chasing the “action,” reacting to emotion, or scrambling to somehow get back to even? If so, think twice. That is probably not a river you should be swimming across. Trading is a business, cash is a valid position, and consistent, effective trading is the goal. This day, this week or even this month will not make the difference between a successful trading year (let alone lifetime) either way. Good trading is good risk management. The bottom line continues to be…be careful.

Swing Trade Ideas for your watchlist and consideration: SNDL, GBT, ADBE, TNDM, TZA, SQQQ, SPXU, SDOW, SOXS. 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

Hit and Run Candlesticks / Road To Wealth Youtube videos

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.

Free YouTube Education • Subscription Plans • Private 2-Hour Coaching

Biden Bounce or Expecting More Cuts

March 4, 2020 by Ed Carter

Tuesday was another roller-coaster day for markets. We sold off at the open but rallied massively for 5 minutes on the news that the Fed cut rates. However, that very short-lived and the rest of the day was a jagged and volatile bearish move. The day closed with the SPY down 2.86%, the DIA down 2.89%, and the QQQ down 3.21%. The good news is that markets did close off their lows. The VXX was also volatile but closed up almost 11% to 24.45. Shortly after the rate cut, the 10-year Bond yield fell to another all-time low of less than one percent (0.906%).

There was an emergency conference call between G7 Finance Ministers during the premarket. However, this resulted only in a statement that they would support global markets against the impacts of coronavirus as appropriate. There was no mention of specific actions or timing in the message. This lack of action by the G7 (many of which already have negative or zero interest rates, and thus limited responses available) may have forced the Fed’s hand in the face of pressure to do something. Either way, the Fed did announce an emergency half percent rate cut just two weeks before their next meeting.

While that rate cut was fully expected by markets in two weeks, the urgency of action and Chairman Powell’s statement led to fear as he said we might see forecasted growth cut in half this year. Perhaps worse, many economists, pundits, and traders have questioned if rate cuts will have any real impact. The critics say this move does nothing to impact the core issues of supply chain disruptions, and both customers as well as workers staying home. In short, the problem simply isn’t that high-interest rates are inhibiting economic activity. So, they label this move as nothing but a transparent stock market circuit-breaker, which failed. To top this off, the President then immediately demanded further rate cuts and Quantitative Easing. (Trump wants the U.S. to have the lowest interest rates and the easiest money in the world.) Something about this picture did not strike markets as good news. So, the rest of the day was a volatile, but strongly bearish selloff.

In virus-specific news, there was a significant development as the global mortality rate has climbed from 2% up to 3.4%. The headline virus numbers have risen to 93,500 confirmed cases and over 3,200 deaths globally. This includes over 13,000 cases outside China as the outbreaks in places like South Korea (5,600), Italy (2,500), Iran (2,400), Japan (300), France (215), Germany (200), Spain (170), and the US (130) continue to expand. In the US, cases exist in 14 states and the death toll has now risen to nine. The Dept. of HHS also said they are working to resolve issues with inaccurate originally-distributed test kits and get 75,000 new (presumably good) kits distributed.

In terms of business impact, every day a host of companies are banning travel, canceling events, closing facilities, warning customers of delays, cutting guidance, and/or suggesting workers telecommute. On Tuesday, that included GOOG, F, the US Federal Government (Seattle), AMZN, INTC, CSCO, CRM, V, among others. Japan also announced they are hoping to hold the Olympics as scheduled, but may delay them as far as year-end. It is also worth noting that markets STILL have fully priced in three more Fed rate cuts this year. So, the expectation seems to be that much more pain is to come as well as much more help.

Overnight, Asian markets were volatile and mixed Wednesday. Europe is green across the board, so far, maybe responding to yesterday’s Fed rate cuts. Maybe the U.S. markets are reacting to Super-Tuesday results or just following Europe. Either way, as of 7:30 am, U.S. futures are pointing to another big gap. This one a gap higher of about 2.5%.

Wednesday’s major news includes Feb. ADP Nonfarm Employment (8:15 am), Feb. Composite PMI and Feb. Services PMI (both at 9:45 am), Feb. ISM Non-Mfg. PMI (10 am), Weekly Crude Oil Inventories (10:30 am), Fed Beige Book (2 pm), and a Fed speaker. Major earnings reports are limited BFB, CPB, and DLTR before the open and SPLK after the close.

As volatility continues, markets swung back to bearish for the 8^th time in the last 9 days on Tuesday. With gaps and ATR both at their largest since 2018, this is not a market for new traders or anyone who is not very fast and attentive. With that said, now that the Fed has fired one of its few remaining bullets, markets expecting more, and no action on the fiscal side or across the G7, the odds seem to stack up as more bearish than bullish in the near-term. But, will markets trade on news or expectations? I certainly can’t (and won’t) handicap that race.

Traders need to keep asking themselves…”Is there really a good reason to be trading markets that are more wide-ranging, more gappy, and less consistent than they have been in years?” Are you chasing the “action,” reacting to emotion, or scrambling to somehow get back to even? If so, you probably don’t have a good reason to be trying to swim that raging river. Trading is a business and consistent, effective trading is the goal. This day, week or even month will not make the difference between the success or failure of your trading year (let alone lifetime). Good trading is good risk management. Remember that.

Swing Trade Ideas for your watchlist and consideration: SMG, RP, GNRC, ENPH, CLX, MSCI, ETSY, ZAYO, AYX, SEDG, GLD. 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

Hit and Run Candlesticks / Road To Wealth Youtube videos

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.

Free YouTube Education • Subscription Plans • Private 2-Hour Coaching

As Virus Spreads G7 To Hold A Call

March 3, 2020 by Ed Carter

Monday saw heavy pre-market volatility, a gap higher and an instant selloff. However, after the first half-hour, the bulls stampeded the rest of the day buying everything hard on the expectation of large and near-immediate rate cuts by the Fed. The result was a massive rally day where the SPY closed up 4.33%, the DIA up 4.90%, and the QQQ up 5.16%. The VXX too was volatile but closed down 3.42% to 22.03.

While coronavirus is the main story, markets have now jumped past the impact to assuming potential rate cuts, QE, G7-coordinated easing, and maybe US tax cuts will erase the economic impact companies are and will experience. For example, JPM reported they believe the Fed will cut half a percent in March and another quarter percent in April. This fits with current markets that have 100% priced in a 50-basis-point cut this month and the betting is 70% on the side of a second cut in April. Still, economists are saying that the rate cuts might make it seem like the government is doing something, but are unlikely to actually help the actual economy. (The belief is the lags are too long in the economy and we are already at incredibly low rates.) So, while markets are expecting these things, nothing concrete has actually happened yet. Therefore, the question is “Can and will the Fed really cut as fast and as much as markets expect?”

The headline virus numbers have risen to 92,100 confirmed cases and over 3,150 deaths globally. This includes over 10,000 cases outside China as the outbreaks in places like South Korea (5,200), Italy (2,100), Iran (2,400), Japan (270), France (200), Germany (170), Spain (120), and the US (105) continue to expand. In the US, cases exist in 14 states and the death toll has now risen to six.

Asian markets were volatile and mixed Tuesday (China up, Japan down). However, Europe is following the US example from Monday. They are strongly green across the board at this point. As of 7:30 am, U.S. futures are mixed and flat with traders apparently waiting on the results of the G7 conference call today.

The only major scheduled economic news for Tuesday is a Fed speaker in the afternoon. However, expect some statement following the G7 Economic Leader Conference Call. That will probably be the true economic news driver today. Major earnings reports are limited to AZO, KSS, and TGT before the open. After the close, HPE, JWN, and ROST all report.

Markets have already latched on to expectations of the Fed (and G7) saving the day and of the virus impacts being lower than forecast on earnings. Monday’s rally was very impressive. However, it’s worth noting that we were down 11-12% the prior week. So, a rebound was due anyway. We also have to bear in mind that regardless of what the market expects, nothing has actually been done yet that will change economic realities. We rallied on hope alone Monday. It is easy to see that it would not take much disappointment to tip things back into “sell, sell, sell” mode. The bottom line is, be careful.

If you are a fast trader and you make good money in those markets, this might be your time. If that’s the case, then go for it. However, the question remains the same. “Do I really want to be trading in these conditions? Do I have an advantage in this kind of market?” Hopefully, an announcement from the G7 and Fed can clear these questions up. However, I won’t be front-running those decisions/announcements. As always, I’m going to urge you not to chase, not to revenge trade, and not to pick bottoms or tops. Trading is a business, cash is a valid position, and consistent, effective trading is the goal.

Swing Trade Ideas for your watchlist and consideration: CLX, BIIB, ENPH, BMRN, FLO, S, DXCM, NUAN, ALKS, TDOC, TPC, GTT. 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

Hit and Run Candlesticks / Road To Wealth Youtube videos

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.

Free YouTube Education • Subscription Plans • Private 2-Hour Coaching

Whiplash and Perspective

March 2, 2020 by Ed Carter

Friday saw another day of wild swings as markets gapped lower and gyrated back and forth on every scrap of news. Among those drivers were a whole bunch of rumor, conjecture, misinterpretation, and some pure lies. What was real is that the bulls believed something positive as they ended the day on a rally. At the close, we had white-body candles and losses were a bit pared. The SPY ended down 0.42%, the DIA down 1.14%, and the QQQ up 0.08%. This closed out the worst week since the financial crisis of 2008, as for the week the SPY was down 11.16%, the DIA down 12.14%, and the QQQ down 10.63%. The 10-year bond yield fell to 1.12% (and fell further over the weekend).

Coronavirus remained the main story. The headline numbers have risen to 90,000 confirmed cases and over 3,000 deaths globally. The outbreaks in places like South Korea (4,300), all 27 EU States (2,100), Iran (1,500), and the US continue to expand. This includes the first two deaths in the US. However, not all the news related to the virus is bad.

On a positive note, the trend in new cases in China continues to go down (fewer new cases found). In fact, on Sunday China announced they officially had more cases who had survived and been released than cases still requiring medical care. This is a great trend change in the world’s second-largest economy. It also points to a theoretical two or three-month course for the virus within a strictly quarantined and controlled population. So, an optimist might be able to extrapolate this into something like a one to two quarter hit for economies and then it’s just a question of what shape the recovery graph takes.

This weekend, the President blamed the media and Democrats for a hoax that led to the market losses. However, he also condemned the Fed for not having given the US the lowest rates in the world long ago and then “hoped” the Fed step in to save markets immediately. This raises the question, from a market standpoint, how worried should we really be? So, let’s put some context on the economic impact of the virus.

China’s manufacturing PMI was reported Saturday. It fell to an all-time low of 35.7 for February, down from 50 in January and far below expectations. (A private version of this number based in Taiwan and covering small-medium businesses, reported 40.3.) As an example, last week, two major Chinese electronics manufacturers, Foxconn (Apple’s main supplier for Macs and iPhones) and Compal (Acer, Dell, HP, and Toshiba’s main supplier) told their major customers they were only back to 30-35% of their normal production capacity. This is 3 weeks behind their normal post-Lunar New Year holiday ramp-up and is also a MUCH slower speed ramp-up than a normal year. From a different angle, across the entire country, only about 55%-60% of China’s trucking capacity has resumed work, but that number is almost zero in the quarantined areas. Disease testing checkpoints and disinfection activities are also slowing the transportation of goods.

Outside of China, global tanker and bulk freighter demand is down 70% since the first of the year as of last week. In addition, the American Assn. of Port Authorities are now forecasting a drop of 10%-20% in cargo volume year-on-year between 2019 and 2020. (That is a massive range for a forecast, but also a huge decline if true.) In South Korea, one of Samsung’s electronic flash memory factories has been shut for two weeks. In Europe, NIKE just closed their EU headquarters.

The point is that in a global economy of just-in-time entities, (where inventory buffers have been systematically reduced for decades in the name of cost savings), supply disruption is a huge problem. Not just in China, but anyplace in the world that sources anything from China, South Korea, etc. In a sense, the more “modern” and profitable a business has been, the worse they will feel the impacts of a supply disruption. The good news is that many industries have replaced inventories with the ability to be more agile (ramp up and down faster). So, is coronavirus the end of the world…no. Is it the end of revenue growth and significant profits for at least a few months or even a couple of quarters for many businesses…undoubtedly.

With that all said, Asian markets were volatile but took another beating Monday, ending deeply in the red again. Europe is also once again down sharply across the board at this point. As of 7:45 am, U.S. futures are pointing to a half to three-quarters of a percent gap lower, but continue to be very volatile whipping back and forth.

In terms of major economic news, Monday’s slate is limited to Feb. Mfg. PMI (9:45 am) and ISM Mfg. PMI (10 am). Major earnings are also limited, with only EVRG, JD, and XRAY reporting (all before the open).

The market freefall slowed Friday as bulls jumped at various signs of hope. However, massive volatility continued. The only thing that really changed over the weekend was a couple of days off to reassess how we should really respond as a trader at this point. This morning we still see a lot of volatility in the future, but they seem to be looking to start the week lower again.

The question you need to answer is “do I really want or need to be trading in these conditions?” Is this volatility and fast-moving market something that is in your favor? If not, step away from broker platform and do something else. Don’t let your emotions lead you into mistakes. Keep repeating the mantra: no chasing….no revenge trading…no bottom/top picking. Trading is a business, cash is a valid position, and consistent, effective trading is the goal.

Sorry but due to futures volatility there are no trade ideas for today. 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

Hit and Run Candlesticks / Road To Wealth Youtube videos

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.

Free YouTube Education • Subscription Plans • Private 2-Hour Coaching

Volatility and Virus News Galore

February 28, 2020 by Ed Carter

Volatility reigned Thursday as markets gapped lower, rallied hard and then fell again even harder. It is a sure bet that a slew of reversal-pickers had their heads handed to them during those intraday swings. On the day the SPY closed down 4.49%, the DIA down 4.54%, and the QQQ down a whopping 5.01%. All three closed on their lows and printed big black candles with large upper wicks. As you’d expect, the VXX spiked to 22.00 and bond yields fell to new all-time lows for a second straight day.

It’s impossible to overstate the dominance of coronavirus in markets, media, and public discussion. The headline numbers are now 84,000 confirmed cases and about 2,900 deaths globally. However, these numbers are questionable with anomalies like Iran, where 26 are reported dead against only 245 cases has led to skepticism. (An 11% mortality rate would be extremely alarming compared to the 3% death rate in China.) Among other headlines that jerked markets around were GS saying that it has lowered its 2020 forecast for the growth of US company earnings to zero. This is a dramatic break from the Wall Street consensus of 7% earnings growth for 2020.

The related resource concern in the US has also escalated. The Dept. of HHS announced Thursday that 40 labs nationally can now test for the virus, but 93 more labs could also be equipped next week. However, shortly after the CDC increased the pool of people who should be tested to include not just those who have been to China, but also travelers from South Korea, Japan, Italy, and anyone with major respiratory issues. Meanwhile, the Gov. of California said his state has 8,400 people under observation because they traveled from China. However, they have less than 200 test kits in the entire state. So, they simply cannot test even a fraction of those 8,400, let alone those who have been to Japan, South Korea or Italy…or the people they have contacted since returning.

Then overnight, a new angle was reported by the government of Hong Kong, who found the first case of suspected human to animal transmission. In this instance, the pet dog of a previously confirmed coronavirus case has now tested as “weakly positive” for coronavirus. This raises the specter of another means of community transmission.

Asian markets took another beating and were deeply in the red again Friday. Europe is also once again down sharply across the board at this point (more than 3%). As of 7:45 am, U.S. futures are pointing to a one to one-and-a-quarter percent gap lower.

Friday’s major economic news includes Jan. Core PCE, Jan. Trade Balance, Jan. Personal Spending, and Retail Inventories (all at 8:30 am), Feb. Chicago PMI (9:45 am), Michigan Consumer Sentiment (10 am), and another Fed speaker. On the earnings front, AES, BAX, and FL all report before the open.

The bears continue to pile on. While some people have made a quick buck in this market, a ton of traders have been sliced and diced by the whiplash. Markets are quite oversold but can remain that way longer than most of us can take the pain of being too early. As we head into a weekend of headline risk, we all need to consider how much risk we want to carry through that period.

Remember that today is a completely new and different day. If you let your emotions lead you into trying to get back to even (or get rich) quickly, you are likely to get punished. Keep repeating the mantra: no chasing….no reversal picking…no bottom/top picking. Trading is a business, cash is a valid position, and consistent, effective trading is the goal.

Friday is payday. Sorry but in front of the weekend and especially with current headline risk, there are no trade ideas today. 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

Hit and Run Candlesticks / Road To Wealth Youtube videos

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.

Free YouTube Education • Subscription Plans • Private 2-Hour Coaching

First US Virus Case of Unknown Origin

February 27, 2020 by Ed Carter

The bears set another bull trap Wednesday. After another gap higher, markets saw follow-through to the upside. By 11am all the major indices were up close to 2%. However, about 11:30am the trap door opened and a selloff lasting the rest of the day ensued. During this selloff, the 10-year Treasury Bond fell to a record low yield (1.3%) as traders flocked to safety. At the close, the SPY was down 0.37%, the DIA down 0.35%, but the QQQ managed to stay green at up 0.52%. All three printed black candles with large upper wicks. However, at the same time, the VXX fell 2% to 18.93. Overall, the recent downturn has taken the indices down about 9-10% from the recent all-time highs.

Coronavirus continues to be the main story and driver of the markets. The headline numbers have now risen to 82,500 confirmed cases and over 2,800 deaths globally. The W.H.O. reported that Wednesday was the first time there were more new cases reported outside China than inside. However, many governments (including China) are suspected of under-reporting cases and deaths. It could also be that the China/World ratio is just indicative of testing outside China finally beginning to ramp up.

Among the major virus news items was the first US case with no known connection to overseas. (This person had not traveled abroad and does not know anyone who has traveled abroad recently. This likely means they contracted the virus from someone else who contracted the virus from a third person who had some connection with one of the early outbreak countries.) Also of importance, is that in Japan the first patient who had fully recovered and tested negative for many days has now tested positive again. So, either reinfection is possible or the best-known tests will give negative readings while the virus is actually still active.

In contrast to widespread public and market concerns, the President was reportedly upset that US markets were down over this issue. He publicly scolded both the press and a CDC official (who told Americans to prepare for disruption to their daily lives) for needlessly spreading fear. Later at his press conference, he said the risk to Americans is very low, his administration’s precautions have been extremely successful, and the US is number one in the world in terms of preparation for a pandemic. However, he did appoint V.P. Pence to act as Czar for the crisis. In a somewhat contradictory fashion, the health professionals who then spoke went on to say that spread in the US is likely although they “hope” to have a treatment regime ready for distribution “sometime soon.” (That potential treatment regime is currently in a one-patient test.)

In terms of impact, more companies (including MSFT) dropped or lowered guidance again overnight. In addition, schools, sports events, and public gatherings have been canceled or outright banned across many nations. The head of China’s Central Bank also said they are “very worried” about the impact on the global economy. Germany’s Health Minister said his country is headed for an epidemic and that quarantine does not seem to be effective. Meanwhile, several other European and Nordic countries (i.e. Austria, Belgium, Croatia, Finland, Netherlands, Norway, Sweden) all reported their first cases. In South America, Brazil also reported its first case.

In an example of the related contradiction/confusion, biotech company MRNA released a statement saying it has already sent a vaccine to the government seeking approval for a human trial. However, at the evening press conference, the head of the N.I.H. vaccine testing said that no vaccine will be ready for human tests until possibly May (late April if we ere lucky) and then would require 12-18 months of testing before proven safe and at least partially effective enough for release. He added that they expect the virus to return next year and he hopes they will have a vaccine ready by then.

Overnight, Asian markets were in the red again. Europe is also down sharply across the board at this point. As of 7:45 am, U.S. futures are pointing to between a 1.3 to 1.7 percent gap lower. So, it looks like a bumpy open, to say the least.

The major economic news for Thursday includes Jan. Durable Goods Orders, Q4 GDP, and Weekly Initial Jobless Claims (all at 8:30 am), Jan. Pending Home Sales (10 am), and a couple more Fed speakers. On the earnings front, BBY, CBRE, DISCA, DISCK, FLIR, NRG, NLSN, PWR, and SRE all report before the Open. Then ADSK, BIDU, CNP, EOG, EIX, MNST, MYP, NKTR, NI, OXY, PRGO, and WDAY report after the close.

The bears are firmly in control and a gap lower looks to be in the cards. However, volatility is high and we will very likely see intraday swings. So, anyone trading now needs to either be fast, able to endure pain and/or hedged. Remember that cash is a perfectly valid position and sometimes the very best position you can take.

Be careful, keep following the trend, listen to price action and trade consistently. Remember Buffett’s number one rule for making a lot of money in the market: 1) Don’t lose a lot of money in the market! Trading is a job and it requires consistent, careful, and effective work…not a gunslinger, get rich quick mentality.

Swing Trade ideas for your watchlist and consideration: IOVA, CME, NFLX, FLO, BYND, TDOC, LPX, SGRY, NTNX, SIG. 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

Hit and Run Candlesticks / Road To Wealth Youtube videos

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.

Free YouTube Education • Subscription Plans • Private 2-Hour Coaching

Virus Fear Still Calling the Market’s Tune

February 26, 2020 by Ed Carter

Markets gave us a head fake at the open Tuesday with a half-percent gap higher followed by a minute of momentum that took markets up an additional half percent. However, this was met by a sharp reversal a couple of minutes into the day that turned into a brutal all-day selloff. There is no mistaking the decisive, large-body black candles printed across all the major indices on the day. The SPY closed down 3.05%, the DIA down 3.15%, and the QQQ down 2.72%. As you’d expect the VXX jumped again and is now at 19.38, a level it has not seen since October.

Coronavirus remains the main story as it seems the possibility of economic impacts has just dawned on many traders in the last few days. That said, governments do continue to downplay this story. For example, both China and South Korea “predict” a turning point in the outbreak in their countries this week. Meanwhile, President Trump and his economic advisor Larry Kudlow said again Tuesday that the virus has been well contained in the US and economic growth will not be significantly impacted.

The headline numbers have now risen to 81,250 confirmed cases and about 2,800 deaths globally. Of course, the vast majority of cases have been inside China. However, looking at major economic centers outside China, South Korea now reports more than 1,260 cases, Japan about 200 cases, Germany 20 cases, France 20 cases, the UK 15 cases, and Italy more than 375 cases.

In terms of impact, many major companies have lowered forecasts. This includes key indicators of consumer activity like MA warned they will miss 2020 revenue forecasts by at least 2-3% (even though those original forecasts were published less than a month ago) as a result of the virus. The European Automaker Groupe PSA warned the entire auto industry worldwide is now working with extremely short supplies of parts. In other indications, the Dept. of Health and Human Services said the virus is “likely to cause a global pandemic” and “it’s just a matter of time before the outbreak starts spreading in the US.” The CDC spokesman agreed with that assessment and went so far as to predict disruption to daily lives in the US.

Overnight, Asian markets were all in the red again. Europe is slightly mixed, but shows losses across most, including the 3 major (FTSE, DAX, CAC), bourses at this point. As of 7:45 am, U.S. futures are pointing to a flat open, but they have been very volatile all night.

The major economic news for Wednesday is limited to Jan. New Home Sales (10 am), Crude Oil Inventories (10:30 am), and a couple more Fed speakers. In terms of major earnings reports, SJM, LOW, NI, PEG, and TJX report before the open. ANSS, APA, BMRN, BNKG, CCI, LB, MAR, NTES, FTI, TCOM, and UHS report after the close.

The bears are firmly in control, but the drop has moved so far, so fast that it certainly looks like chasing to add shorts here, unless you are a very short-term trader. Yes, Asia and Europe continued to slide, but that doesn’t mean we can’t see an up day in a downtrend. Be careful to not let your emotions get the better of you. No revenge trading. No chasing. No reversal picking. Keep that discipline.

Remember that cash and sitting on your hands is a valid position and sometimes the best move you can make. Be cautious, follow the trend, listen to price action and trade consistently. Keep reminding yourself, trading is a job/business and sometimes, calling in sick for a couple of days is the only way to avoid burnout.

Sorry, but there are no trade ideas for today. Markets need to settle before we can plan out quality swing trades. 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

Hit and Run Candlesticks / Road To Wealth Youtube videos

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.

Free YouTube Education • Subscription Plans • Private 2-Hour Coaching

Bounce-Back Open Bull Trap?

February 25, 2020 by Ed Carter

US markets followed the rest of the world lower on Monday. The day started with a large gap lower and then volatility reigned as all three indices printed large-wick, indecisive candles. The SPY ended down 3.32%, the DIA down 3.51% (1031 points), and the QQQ down 3.86%. These losses caused the SPY and DIA to give up all their gains since the end of November. In the process, all three indices also gave up some support levels, although the QQQ was able to hold on to its 50sma. As you’d expect, the VXX spiked to 17.67 and the T2122 plummeted into oversold territory at 5.15.

Most voices among analysts and financial journalism are expecting this bearish move to continue. It seems that all the bad news (especially the coronavirus) that the bulls have been ignoring has suddenly caught their attention. As a result, a full flight to safety is on with Gold at levels it has not seen since 2013 and Bonds at all-time highs (extremely low yield). With that said, any continued move lower does not have to happen Tuesday. A dead-cat bounce is possible, if not probable, after a 3-4% single-day drop.

On the coronavirus front, the headline numbers are now 81,000 confirmed cases and more than 2,700 deaths. As of Tuesday, in addition to China and South Korea (1,000 cases), now major portions of Northern Italy (300 cases) are under quarantine. There has also been an expansion in cases in the middle east, with Iran, Kuwait, Egypt, Lebanon, and UAE all reporting cases. In addition, after the close, MA said they are lowering their 2020 revenue forecasts 2-3% from the levels announced on its January 29 conference call. UAL also withdrew its 2020 forecast, again citing the virus impacts.

Overnight, Asian markets were mixed, but Japan taking a major hit as the NIKKEI (-3.34% on Tuesday) was closed Monday for a holiday. For the second straight day, Europe is bright red across the board at this point. As of 7:45 am, U.S. futures are pointing toward a bounce-back Tuesday as all three major indices are looking at an open half to one percent higher.

The major economic news for Tuesday is limited to the Conf. Board Consumer Confidence (10 am) and a couple of FOMC speakers during the day. In terms of major earnings reports, AEE, AMT, HD, and M all report before the open. Meanwhile, CSGP, CRM, MATX, and PSA report after the close.

Once again, the bears had control yesterday. That makes three days in a row, which was a first going all the way back to the end of November. More companies are decrying the impact of the coronavirus on their operations or sales every day. This means the bears are likely to maintain control, in general, at least until markets have repriced to reflect a large drop in earnings. However, we know markets don’t tend to move in straight lines for long. So, expect more volatility, including up days in the downtrend.

Don’t let your emotions get the better of you. No revenge trading! The market doesn’t owe you a damn thing and chasing to get back to even fast is likely to see you buy just before another reversal lower. Also, bear in mind that volatile markets mean traders need to be quick or hedged if they don’t want to endure serious pain. Believe me, I’ve been there and taken those beatings.

I know it’s boring and you are tired of hearing us say it. However, don’t try to lead the chart. Follow the trend, listen to price action and trade consistently or Mr. Market will punish you. Trading the same pattern over and over, taking profits for base hits and consistently moving your stops is how successful traders work…regardless of how boring you might think that sounds. Keep reminding yourself, trading is a job/business. It is not a lottery ticket.

Swing Trade ideas for your watchlist and consideration: BMY, TDOC, GDOT, BBY, PETS, DOV, RH, PRVB. 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

Hit and Run Candlesticks / Road To Wealth Youtube videos

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.

Free YouTube Education • Subscription Plans • Private 2-Hour Coaching

Virus Is More Than the Bulls Can Ignore?

February 24, 2020 by Ed Carter

On Friday, concerns over coronavirus spread led to a rough day on Wall Street. The major indices all gapped lower and saw follow-through as the bears were in control most of the day. At the close, the SPY was down 1.03%, the DIA down 1.04%, and the QQQ down 1.92%. The VXX climbed on the day but closed back below 15 while the T2122 remains in the mid-range. None of the 10 sectors were in the green, but Technology, Consumer Cyclical, and Energy took by far the worst beatings. This all gave us the first Weekly black candle in the QQQ since November.

However, it is worth noting that the bulls did push markets up off the lows during the last half hour. So, the 50sma held in the DIA and potential support levels held in the SPY and QQQ. The point is that we were extended to start and due for some pullback. However, we didn’t see a lot of bulls jumping out of windows and we are still within about three percent of all-time highs.

After the close Friday, it was announced that WFC had agreed to pay $3 billion in a settlement with the Federal government to avoid criminal charges over their decade-long fraudulent sales practices. GOOGL also reached a settlement with all 50 state attorneys general to allow outside consultants to dig into Google business practices (as part of an anti-trust investigation), but force some confidentiality agreements on the consultants. This will pave the way for the antitrust investigation to proceed.

Over the weekend the coronavirus outbreak continued. The count is now at 80,000 confirmed cases and 2,600 deaths attributed to the virus. However, these numbers are suspect as China has revised the methods they use to count cases three times since the original report. In addition, both the Chinese and some other governments are still downplaying the impact. For example, at the G20 Summit, the I.M.F. said the outbreak would only trim 0.1% off their global growth forecast. China went so far as to urge businesses to reopen and ease restrictions on travel in Wuhan. (The easing of travel lasted less than three hours before they had to lock things down again.)

However, the W.H.O. is reporting an alarming jump in cases outside of China. For example, South Korea saw exponential growth in cases this weekend, with a 20-fold increase to over 750 cases and 12 deaths as of Sunday night. Iran and Italy have also seen outbreaks. The Italian outbreak (160 confirmed cases) has seen Austria close its border with Italy…and both are inside the EU. The same is true for Iran (61 cases and 12 deaths) with Turkey closing its Iranian border. Ominously, the W.H.O. says the Iranian cases are a particular concern because their cases come from different areas of Iran and all from people with no direct connections to China.

Overnight, Asian markets were red across the board, with South Korea (-3.87%) and Australia (-2.25%) taking major hits. Europe is also bright red from end to end so far, with all the major bourses down well over 3.5% at this point. As of 7:30 am, U.S. futures are also pointing toward a large gap lower of between one and two percent in the major indices.

There is no major economic news scheduled for Monday. On the earnings front, there are no major reports before the open. However, HPQ, INTU, KEYS, and OKE all report after the close.

The bears did create some follow-through on Friday, but the bulls didn’t throw in the towel. However, the spread of the virus impacts far beyond Chinese borders may finally be negativity that the bulls cannot ignore. The weekend business and especially virus news are heavily in the bear’s favor. So, we remain not too far from all-time highs, but it looks like a very rocky morning coming up for the bulls.

Unless you are extremely quick, nimble and experienced, this market is not the river you should be trying to swim. Manage the trades you are in and think twice about chasing anything in such a volatile market. Use caution. Take profits and keep moving stops. Remember that sitting on your hands can sometimes be the best move you can make. Whatever you do, DO NOT CHASE and don’t lose your discipline. Our job is to just rack up consistent gains, not find winning lottery tickets.

Due to market conditions this morning, there will be no trade ideas today. Manage the trades you are in now. 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

Hit and Run Candlesticks / Road To Wealth Youtube videos

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.

Free YouTube Education • Subscription Plans • Private 2-Hour Coaching