Once again, the bulls ran wild on Wednesday. Markets gapped up by almost a percent and then proceeded to run higher in the SPY and DIA. The QQQ also gapped higher, but then faded the gap, mostly due to a sharp pullback by TSLA after its parabolic move Monday and Tuesday. The SPY closed up 1.15%, the DIA up 1.67% and the QQQ also closed up 0.33%. This made for new all-time high closes in the SPY and QQQ again. It is worth noting that the major indices (including the VXX) are a bit extended from their moving averages. In addition, the T2122 closed at 88.05 which is in overbought territory.
As usual, the coronavirus story continues to be the top story. Confirmed cases are now over 28,000 and deaths have hit 563. In related news, YUM China has closed 30% of its stores due to the outbreak. TSLA also closed it dealerships in China and announced the delay in delivery of the vehicles that have already been sold there. In addition, Japan has quarantined a CCL cruise ship for two weeks after 20 passengers have tested positive.
In a potentially related story, China announced that it will cut in half the retaliatory tariffs placed on US goods (in response to the US tariffs). In some cases that means going from 10% to 5% and in others from 5% to 2.5%. Analysts seem mixed on what to make of the move. Some feel this is a sign of improving relations and more proof that President Trump’s trade war worked. Others suspect this is a goodwill gesture in front of China not meeting the import quotas announced as part of Phase One of that deal. In either case, markets are taking it as good news.
After hours Wednesday, markets saw a number of earnings beats. Among these were CINF, CTSH, FMC, FOX, FOXA, MET, and QCOM. On the other side, AVB, LNC, and ORLY all posted misses.
Overnight, Asian markets continue to rebound with green across the board again. The same is true in most of Europe, with green everywhere except Russia and Athens at this point. As of 7:30 am, U.S. futures are also pointing to another gap higher, this time by about four-tenths of a percent.
Thursday’s major economic news is limited to Weekly Jobless Claims and Q4 Nonfarm Productivity (both at 8:30 am). However, there are a couple FOMC speakers during the day. On the earnings front, among those reporting before the open are: ABMD, BLL, BMY, CAH, CI, EL, HBI, ICE, K, MAC, PM, REGN, SPGI, SNA, TPR, TWTR, TSN, VMC, WLTW, XYL, and YUM.
The bulls have been relentless this week and pre-markets are telling us to expect more of the same. However, pay attention to what happened in TSLA on Wednesday. The take-off of a jet plane is awesome. However, if the jet runs out of fuel, it falls out of the sky like a rock and that too can throw you back in your seat. Both long-term and short-term trends are clearly bullish. However, I think we need to remain nimble, hedged or cautious here.
Remember, nobody ever went broke taking profits and reducing risk. We talked about this in the room yesterday afternoon where people were hesitant to take 30%, 50%, or even 100% profits off the table. Yes you may be able to squeeze more out of a trade, but you can also give back those impressive gains in a heartbeat.
Sorry Rick is out sick today. So no Swing Trade Ideas for your consideration and watchlist now. I will pull together a list by 9:10am Eastern and present them in the room. 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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