On Tuesday the PPI came in a bit down from last month (but still 10.8% on an annual basis) and as a result, the premarket rally faded a bit.  Markets still gapped between a quarter of a percent and three-quarters of a percent higher at the open.  All 3 major indices then whipsawed back and forth all day.  This left us with black-bodied Spinning Top candles in all 3 of those indices.  It is worth noting the volume dropped back to normal or slightly below normal across all major indices.  On the day, SPY lost 0.30%, DIA lost 0.42%, and QQQ managed to eke out a gain of 0.18%.  The VXX fell just under 2% to 25.33 and T2122 climbed slightly to 2.22.  10-year bond yields climbed to 3.479% and Oil (WTI) fell to $118.51/barrel.

Traders are now fully expecting the Fed to raise rates by three-quarters of a percent at 2 pm.  Bond yields are incredible turmoil as the 2-year, 5-year, and 10-year bonds now all yield more than the 30-year (all are inverted).  In fact, the 5-year is the highest yield of those four T-bills.  So, we also have a 5-yr vs 10-yr inversion.

After the close, ASTL missed on revenue by almost 23%, yet still managed to beat on earnings.  Also after the close, MNST announced an increase of $500 million in its share buyback plan ($157 million also remains unspent in its previously-authorized buyback program). 

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In cryptocurrency news, COIN announced they are letting 18% of their workforce go.  This comes on top of the recent Luna stablecoin failure and other stablecoins losing parity with the dollar.  Bitcoin fell another 7% and is now in the $21,500 area (down 55% on the year) and fell another $1,000 overnight to $20,500.  The second-largest cryptocurrency (Ethereum) is down even more, now at $1,178 which is down 69% on the year.

30-year, conforming mortgage rates surged to 6.28%.  This is a dramatic rise as the rate was 5.55% just a week ago.  As a result, on a $400,000 home, the mortgage payment (without insurance or property taxes) climbed to $1,976/month, a 41% increase on the year.  Of course, this spike has killed mortgage demand with total mortgage applications down 53% from the same week one year ago. 

On the earnings front, this is a very slow week.  On Thursday we get reports from KR, CMC, JBL, and ADBE.  There are no earnings reports on Friday.

Overnight, Asian markets were mixed but leaned red with China up and the rest of the region down.  Hong Kong (+1.14%), Shenzhen (+0.95%), and Shanghai (+0.50%) were the only green in the region with South Korea (-1.83%), Malaysia (-1.50%), and Japan (-1.14%) pacing the losses.  However, in Europe, stocks are nearly green across the board.  Only Norway (-0.64%) is in the red with the FTSE (+1.13%), DAX (+1.13%), and CAC (+1.06%) leading the region higher.  As of 7:30 am, US Futures are pointing toward a moderate gap higher to start the day.  The DIA implies a +0.49% open, the SPY is implying a +0.63% open, and the QQQ implies a +0.85% open at this hour.  10-year bond yields have plummeted back to 3.36% and Oil (WTI) is down half of a percent to $118.33/barrel in early trading.

The major economic news events scheduled for release Wednesday include May Retail Sales, May Import/Export Price Indexes, and NY Empire State Mfg. Index (all at 8:30 am), April Business Inventories (10 am), Crude Oil Inventories (10:30 am), Q2 Fed Interest Rate Projections, Fed Rate Decision, and Fed Statement (all at 2 pm), and Fed Chair Press Conference (2:30 pm).  There are no major earnings scheduled for the day.

In economic news later this week, on Thursday we see May Building Permits, May Housing Starts, and Philly Fed Mfg. Index.  Finally, on Friday we get May Industrial Production and hear from Fed Chair Powell again.

Today will be all about the reaction to the Fed decision and press conference. Although the market has priced in a 0.75% rate hike today, the dot plot (interest rate projections), statement, and especially what Fed Chair Powell says and how he replies to questions are likely to cause major volatility. Be extremely careful trying to react quickly to the news. The market will likely whipsaw this afternoon and again in the morning as traders overreact, overcompensate again, and then finally whip back after thinking on it overnight. The point is, that there is no need to be in a hurry.

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. Wait for confirmation. 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: TWTR, TTWO, NIO, VIPS, BKSY, TME, UVXY, ABCL, SQQQ. 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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