Monday was a “Pop and Drop” day.  News that President Biden would renominate Jerome Powell to Chair the Fed led to a gap up and follow-through the first hour of the day.  However, all 3 indices spent the rest of the day selling off and grinding sideways, closing out the day with a heavy selloff the last 30 minutes of the day.  This left us with ugly black candles with large upper wicks.  The SPY and QQQ also printed Bearish Engulfing (of a Doji) type of candle.  On the day, SPY lost 0.28%, QQQ lost 1.16%, and DIA gained 0.08%.  The VXX rose to 21.22 and T2122 climbed just outside of the oversold territory to 25.25.  10-year bond yields spiked to 1.629% (a +0.095% gain on the day, huge in bonds) and Oil (WTI) rose half of a percent to $76.32/barrel.

Part of the reason for the market selloff and bond yield spike came during the mid-morning press conference.  At that presser, both Fed Chair Powell and new Vice-chair Lael Brainard (who had been the other potential nominee for Chair) stressed the need to fight inflation.  This was a bit of a surprise coming from Brainard, who has generally been seen as very doveish among Fed members.  Interestingly, contrary to their own words at the presser, a White House source told Bloomberg that their priority will be full employment (which has been the Fed priority so far).  It is also worth noting that many CNBC reported that many Congressional progressives had expected Brainard to get a top regulatory role, but that will not be the case since she is being nominated as Fed Vice-Chair (assuming approval).

After the close, A, ZM, URBN, CENT, and KEYS all beat on both lines.  A clean sweep to the upside among major reports for the evening.  Today will be another heavy retail earnings day with the preceding retail earnings reports pointing toward a strong quarter across the board for the industry. 

So far this morning, the big news is that the US will tap its strategic oil reserves. China, India, Japan, the UK, and South Korea will all join in this effort to quell energy inflation by tapping their own reserves. The move may be more symbolic than truly supply-shaping. However, President Biden announced the US will release 50 million barrels from the US Reserve. This while US oil consumption is around 18 million barrels per day.

This morning, ADI, ANF, BBY, BURL, DKS, DLTR, DY, ESLT, and SJM have all beat on both lines.  Meanwhile, MDT and J have beat on earnings but came up short on revenue.  So, another great day of earnings is underway, especially in retail. Some retailers, such as DKS, are even raising guidance after crushing Q3 numbers.

Overnight, Asian markets were mixed, but leaned to the downside.  Hong Kong (-1.20%), Taiwan (-0.77%), and Indonesia (-0.68%) paced the losses.  On the other side, Australia (+0.78%) and India (+0.50%) led the gains.  In Europe, markets are strongly (but not completely) red at mid-day.  The FTSE (unchanged), DAX (-0.67%), and CAC (-0.20%) are typical with only Russia (+1.68%) showing green in early afternoon trading.  As of 7:30 am, US Futures are pointing toward a mixed, flat open.  The DIA implies a +0.05% open, the SPY implies a -0.03% open, and the QQQ is implying a -0.20% open at this hour.  10-year bond yields are rising again and Oil (WTI) is off half of a percent in early trading.

The major economic news scheduled for release Tuesday is limited to Manufacturing PMI (9:45 am) and Services PMI (10 am).  Major earnings reports scheduled for the day include ANF, AEO, ADI, BBY, BURL, CBRL, DKS, DLTR, DY, ESLT, SJM, J, MDT, and XPEV before the open.  Then after the close, ADSK, DELL, GPS, GES, HPQ, JWN, PSTG, and VMW report.

It looks like markets are recovering from overnight lows and looking to open just on the red side of flat following the terrible close Monday. It is worth noting that the QQQ and SPY are at their T-lines, while the DIA has long since given up that level as support. The mid-term and long-term trends remain bullish, but in the short-term, the bears have the momentum. Remember that it’s a short week for the market. So, don’t be surprised if volume dries up.

Watch your current positions before looking to add any new trades. Consider how you want to enter the weekend news cycle (and potential low-volume week ahead) and if there is any profit-taking or hedging to get done. Focus on your trade rules and on managing the things you can control. That should include consistently taking profits when you have them and moving your stops in your favor. Trade carefully and continue to think twice before holding through earnings…especially without a hedge.

Ed

Swing Trade Ideas for your consideration and watchlist: Rick is still not feeling up to snuff, so no trade ideas today. 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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