Friday saw a gap higher that was immediately faded and more, but the bulls kicked into rally mode at 10 am and then again at 2:30 pm to take markets out on the highs.  This left us with large white candles with lower wicks in all 3 major indices.  However, we did not break out of the week’s lower trading range, with a lot of resistance overhead.  On the day, SPY gained 2.47%, DIA gained 1.63%, and QQQ gained 3.14%.  Overall, it was the best day for bulls since June of 2020.  The VXX fell 6% to 22.99 and T2122 rose but remains in the oversold territory at 17.82.  10-year bond yields fell to 1.793% and Oil (WTI) rose 0.62% to $87.15/barrel.

Over the weekend, Fed member (voter) Raphael Bostic told the Financial Times that the Fed “could” hike rates by half a percent in March, or on every increase this year if needed.  This was news because the Wall Street consensus is that all the rate hikes would be in quarter-point increments.  However, Bostic was quick to point out that, at this point, his vote would still be for 3 quarter-point increases in 2022.  That said, many have called for more aggressive measures and the big Banks (GS, MS, JPM, etc.) are already saying they now expect 4 or more rate hikes this year.  Add to this, Fed Chair Powell refusing to rule out a hike at every meeting this year and markets will need to price in the possibility of both more and more harsh tightening by the Fed that has been generally expected to this point.

In business news, Sunday reports claimed CTXS is very near a buyout at $104/share.  The move was widely rumored Friday as traders drove the price to $105.55.  So, oddly enough, it appears the company has agreed to sell at a discount to the current market price.  In earnings news this morning, TT beat on both lines while LHX and OTIS both beat on earnings and came in short on revenue.

Overnight, Asian markets were mixed, to the extent they were open (all Chinese markets are closed until Feb. 4th or 5^th).  South Korea (+1.87%) and Japan (+1.07%) led the gainers while Malaysia (-0.51%) paced the losses.  In Europe, stocks are mostly green as of mid-day.  The FTSE (-0.03%) and CAC (-0.12%) are the only red on the continent with the DAX (+0.22%) being more typical in early afternoon trading.  As of 7:30 am, US Futures are pointing toward a down open.  The DIA implies a -0.65% open, the SPY is implying a -0.46% open, and the QQQ implies a -0.12% open at this hour.  10-year bond yields are flat and Oil (WTI) is up half of a percent in early trading.

The only major economic news scheduled for release Monday is Chicago PMI (9:45 am).  Major earnings reports scheduled for before the market include OTIS and TT.  Then after the close, AXTA, CBT, CRUS, FN, GGG, KMPR, NXPI, SANM, and WWD report.

The bears and bulls remain locked in a struggle that has lasted a week. Resistance remains overhead, even as the major indices struggle with their T-lines. However, the bears have not been able to break the consolidation and resume the downtrend either. So, continued caution is key until either the downtrend resumes or a new bullish trend takes shape. Stay nimble, hedged, and/or out of the way.

Trade with the trend, don’t chase, keep consistently taking profits when you have them, and move your stops in your favor. Remember that the first rule of making money in the market is to not lose big money in the market. So, stick to your trading rules and manage the things you can control. Don’t be stubborn, protect yourself from yourself. When you are wrong, just admit it and take your loss. (That’s why we set stops in the first place.)

Ed

Swing Trade Ideas for your consideration and watchlist: UVXY, VMW, ZIM, PTON, RWM, XLE. 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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