Stocks gapped a percent higher at the open Monday.  After treading water for the first 90 minutes, the bears stepped in and drove price back down to fill the gap by about 12:30 pm.  From there we have seen a whippy, rollercoaster to sideways in the gap the rest of the day.  This action left us with gap-up, black-bodied, Spinning Top candles in all 3 major indices.  From a sector standpoint, it is the Consumer Cyclicals that are the big loser of the day while Industrials, Basic Materials, and Financial Services led the gains.  On a day where sideways intraday chop is the rule, markets remain inside the recent choppy consolidation range.  On the day, SPY gained 0.30%, DIA gained 0.03%, and QQQ gained 0.33%.  The VXX also was up two-thirds of a percent to 22.03 and T2122 was flat (and remains overbought) at 88.02.  10-year bond yields surged to closed at 3.04% and Oil (WTI) closed down at $119.40/barrel.

During the day, AAPL held its annual World-Wide Developer’s Conference.  At the event, the company announced new M2 CPUs for Macbooks, another version of its iOS for phones and iPads, a new macOS and a new Apple Watch OS.  For investors, the largest reveal was probably the entry of AAPL into the buy-now-pay-later business with an offering called Pay Later.  During the event, CEO Tim Cook giggled but then refused to comment on whether the Chinese portion of AAPL’s supply chain is opening up yet. On the day, AAPL stock was up one-half of a percent but has given that back overnight, trading down half a percent in premarket.

After the close, NGL beat handily on revenue but also printed an awful miss on earnings. This is very odd for an oil refinery when gas prices have been at record levels the last few months.

SNAP Case Study | Actual Trade

In stock news, TWTR printed a Belthold type of candle as traders furiously tried to regain ground after Elon Musk threatened to walk away (at a $1 billion cost) from his purchase offer over the company not providing him data on users.  On the day, TWTR close down 1.49% after being down almost 6% early.   Solar stocks had a good day as on Sunday the Biden Administration announced a 2-year dropping of tariffs on solar panel imports.  Among the biggest gainers were FTCI (+31.74%), SHLS (+21.48%), ARRY (+18%), and JKS (+7.98%).  Among the more widely-traded solar stocks, ENPH (+5.41%), SEDG (+2.86%), and RUN (+5.94%) were the winners while domestic panel producer FSLR (-3.92%) took a hit.

Overnight a speech from a senior Chinese economist at a state-run research group on the topic of US-China relations was posted.  In the speech (delivered last month, but printed today), he called for China to seize TSM if the West were to levy Russian-like sanctions on China.  (For anyone who doesn’t know, TSM is the largest and leading technology semiconductor manufacturer in the world.  Companies like AMD, NVDA, INTC, etc. all are dependent on TSM chips.)  In the speech he went on to talk about the recovery of Taiwan and worried that TSM is speeding up the transfer of their operations to the US by building six factories (chip fabs) here.  He flatly stated that China must not allow the goals of the transfer be achieved.  TSM stock is down 0.87% in premarket while AMD is down 1.33%, NVDA is down 1.83%, and INTC is down 0.74%. on this potential threat.

In crypto news, a bipartisan group of US Senators and Congressmen said they are ready to debut a plan to overhaul the regulatory framework for cryptocurrencies and futures.  The plan would classify the vast majority of “digital assets” as commodities and empower the CFTC (not the SEC) to regulate the market.  This runs somewhat contrary to the fact that SEC Chair Gensler has been the one leading a public crusade to regulate crypto assets.  This law is just being introduced and much debate, horse-trading, and voting remain before this plan becomes law.  It is also worth noting that the “crypto lobby” is has a lot of sway in Congress, having contributed $30 million to various campaigns in the last 2 years according to CNBC.

Overnight, Asian markets leaned heavily to the red side.  Australia announced a rate hike that was larger than expected (50 basis points with 25 basis points expected). As a result, South Korea (-1.66%), Australia (-1.53%), and New Zealand (-1.33%) paced the losses.  Only Japan (+0.10%), Singapore (+0.15%), and Shanghai (+0.17%) were able to print any green across the region.  In Europe, stocks are similar to Asia, with red all over the board and only 3 minor patches of green at mid-day.  The FTSE (-0.16%) leads, perhaps on the fact that Boris Johnson survived a “No Confidence” vote and will remains PM of the UK, with the DAX (-1.01%) and CAC (-1.08%) more typical of the region in early afternoon trading.  As of 7:30 am, US Futures are pointing toward a gap-down start to the day.  The DIA implies a -0.84% open, the SPY is implying a -0.96% open, and the QQQ implies a -1.21% open at this hour.  10-year bond yields are down a bit to 3.016% and Oil (WTI) is off six-tenths of a percent to $117.75/barrel in early trading.

The major economic news events scheduled for release Tuesday include April Imports, April Exports, and April Trade Balance (all at 8:30 am).  However, keep an eye on unannounced guidance changes (lowering) as the market looks for clues of how bad the inflations and slow-down will impact companies. For example, this morning TGT warned their profits will be lower than expected in the short-term as it pays to cancel orders and marks down inventory to sell slow-moving products. The major earnings reports scheduled for release include ASO, CHS, CBRL, GIII, PLAY, MOMO, HOLX, SJM, REVG, and UNFI before the open.  Then after the close, CASY reports. So far this morning UNFI, SJM, MOMO, GIII, and CHS all reported beating on the top and bottom lines.  Meanwhile, REVG missed on both revenue and earnings.

In economic news later this week, Wednesday we see Crude Oil Inventories and the 10-year bond auction.  Thursday brings Weekly Initial Jobless Claims.  Finally, on Friday we get May CPI, Univ. of Michigan Consumer Sentiment, the WASDE Report, and the May Federal Budget Balance.

On the earnings front for later this week, on Wednesday we get reports from CPB, OLLI, ABM, FIVE, and GEF.  Thursday brings reports from BILI, SIG, DOCU, SFIX, and MTN. Finally, on Friday there are no major reports scheduled.

It looks like the bears will retest the bottom of the recent chop range (and the T-line) on the gap-down open across all 3 major indices. This will be a key level and if it fails, the bulls may run for cover in the short term. With that said, until that level is broken, we have to assume this is just more chop inside the consolidation zone.

Technically speaking, we remain over-bought in a choppy consolidation after a one-week rally inside a longer-term downtrend. None of the major indices are in an uptrend yet (at least on a daily chart). So, we remain in the no-mans-land where the mid-term downtrend has been broken, but a new uptrend has not been confirmed. This is a dangerous area for Swing Traders. So continue to be careful, nimble, and/or hedged. (Or sit on your hands.)

Remember to be very careful chasing gaps/moves early. The whipsaw is very real during times when we are thinking about changing trends and as we’ve seen lately, gap-chasers can get hurt. Trading is our job. So, do the work and work the process. Stick with your trading rules, trade with the trend, and consistently take profits when you have them. Always move your stops in your favor. Remember that the first rule of making big money in the market is to not lose big money in the market. So, don’t be stubborn. If you have a loss, just admit you were wrong and take it before it grows. As they say, the best time to have taken a $500 loss is when you are now staring at a $1,500 loss. Finally, remember that you get rich steadily over the long run in Trading…not by striking it rich on one or two trades. So, give up that lottery ticket mentality.

Ed

Swing Trade Ideas for your consideration and watchlist: CC, MO, COP, VLO, PG, AAPL, W, WMT. 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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