Markets gapped down about a percent Monday as the virus rages around the country.  Then when Existing Home Sales fell 3.5%, the brief rally gave way to a strong selloff that lasted until 1:30 pm.  After that, prices ground sideways until a late rally took prices well up off the lows. Still, the SPY, DIA, and QQQ all gave up their short-term price and 50sma support levels.  On the day, DIA was down 2.21%, SPY down 1.84%, and QQQ down 1.50%.  VXX gained 9% on the day, closing at 24.17 and T2122 dropped like a rock, well into oversold territory at 11.60.  10-year bond yields fell to 0.804% and Oil (WTI) also dropped over 3% to $38.58/barrel.

Related to stimulus, talks continued Monday, but the blame game escalated too.  After her call with negotiator counterparts failed to make more progress, House Speaker Pelosi sent a scathing letter decrying the Administration for “official malfeasance.”  At the same time, Treasury Sec. Mnuchin declared that the problem was that “Pelosi has her heels dug in.”  Meanwhile, Senate Majority Leader McConnell was not part of the negations and adjourned the Senate until after the election just as soon as the ACB vote is finished Monday.  So, the probability for any deal passing this week is now extremely remote.

Overnight it was announced that AMD will buy XLNX in a $35 billion all-stock deal.  Both are competitors of INTC in the crucial (biggest dollar) datacenter market.  LLY also said it has stopped testing of its monoclonal antibody treatments (the same class as one given the President) in hospitalized patients after a review showed it doesn’t appear to be helping.

The virus is raging across the US, even as many continue to downplay the need and/or usefulness of containment measures, politicians even claiming we’ve turned the corner.  At the same time, 43 states reported increasing new case counts of more than 5% compared to a week ago. 32 states are now in the White House Task Force’s “Red Zone” (having more than 100 cases per 100k of population).  The case numbers show we now have 8,962,783 confirmed cases and 231,045 deaths with a 7-day average daily new case count having risen to 70,987/day, while the average daily deaths also ticked up to 828.  Dr. Fauci (NIH) and a pair of former FDA Commissioners all called for a national mask mandate to stem the growing wave of new cases.

Globally, the numbers rose to 43,857,818 confirmed cases and the confirmed deaths are now at 1,165,500 deaths.  This includes the world seeing over 411,000 new cases Monday with a 7-day average about 443,000.  Global Covid deaths rose by over 5,100 on the day.  Germany reported an exponential rise in cases Tuesday with 280 regions now considered virus hotspots (more than 50 cases per 100k of population).  Russia also imposed a nationwide mask mandate among other new restrictions to control the virus.  Meanwhile in good news, India reports another drop in new cases (to a level not seen since late July).

Overnight, Asian markets were mixed, but leaned to the red again.  New Zealand (-1.75%) and Hong Kong (-0.53%) led the losses.  Meanwhile, India (+1.03%) and Hong Kong (+0.54%) led gainers.  In Europe, markets are flat to red across the board as the virus continues its surge throughout Europe and the US.  Among the big 3 bourses, the FTSE is flat at +0.13%, DAX fat at -0.04%, and CACA down at -0.64%.  The rest of European Exchanges are down between 0.10% and 0.90% at this point in their day.  As of 7:30 am, US futures are pointing to a modest gap higher at the open.  All three major indices are implying an open up 0.40% at the moment.  

The only major economic news for Tuesday is Sept. Durable Good Orders (8:30 am) and Conf. Board Consumer Sentiment (10 am).  Major earnings on the day include ABG, BP, CAT, CMI, CNC, CSTM, DTE, ECL, GLW, HOG, HUBB, IVZ, LH, LLY, MMM, MRK, NVS, ODFL, OMC, PFE, PII, QSR, ROP, RTX, SHW, SWK, TECK, and XRX before the open.  Then after the close, AFL, AMD, CB, CHRW, CYH, EIX, FISV, FTV, JNPR, MSFT, NCR, OI, OKE, THG, and UNM all report.

The Senate, having confirmed ACB as an Associate Justice to the Supreme Court adjourned to return home for politicking. This does remove a little uncertainty as there is now no way to achieve a deal on stimulus prior to the election. However, that won’t stop the two main negotiators from casting blame this week. The long and short of it is that the major market driver of last month (hope for more stimulus) is gone, leaving earnings and election worries to drive markets.

It looks like a green open, but there’s still quite a bit of work to do if the bulls want to climb back into the range of the last week’s candles. The short-term trend remains bearish and has broken the medium-term uptrend and recent support. Volatility is likely to continue with more economic news, major earnings, and only a week until the election. So, keep locking-in your profits and sticking to your trading rules. Don’t get greedy, don’t chase the moves you have missed, and don’t predict. Be sure that you respect potential support and resistance.  Follow the trend and trade your plan.

Ed

Swing Trade Ideas for your consideration and watchlist: HOLX, BIDU, RAD, XLU, OKE, OTRK, RIOT. 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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