Wait for President, Congress, And-Or Fed

Monday was another indecisive day with at gap up and then no follow-through.  This left all 3 major indices stuck in what could certainly be a bottom, but could also be consolidation before another leg down.  On the day the SPY was up 1.31%, DIA up 1.26%, and QQQ up 1.74%, but all closed well off their highs.  The VXX fell again to 25.10 and T2122 rose sharply (out of oversold territory) to 70.49.  10-year bond yields rose slightly to 0.674% and Oil (WTI) was flat at $37.29/barrel. 

During the day, ORCL confirmed that they had reached a deal with Byte Dance to partner with TikTok for US operations.  However, the parties are counting on President Trump to back off his original demands, because there would be no outright sale to ORCL in the agreed deal.  This leaves an open question because of the political points to be made, as well as the ties of ORCL Execs to the President.  All this is on top of the President’s demand that the US government get “a lot of money” out of the deal.  So, several headlines Monday, but nothing definitive yet

The House is working on a Continuing Resolution to keep the government funded past the end of the fiscal year on Oct. 1st.  Treasury Sec. Mnuchin (negotiating for Republicans) has agreed with Speaker of the House Pelosi that the only topic for this bill will be the CR (no stimulus).  Republicans want the new funding to only last until just past the election, while the Democrats want it to last through the swearing-in of the next Congress.  Negotiations are still underway about the funding levels of the CR (and probably pork) and no vote is expected until next week, giving the Senate just enough time for an up/down vote on keeping the government open.

On the virus front, in the US, the numbers show we now have 6,749,406 confirmed cases and 199,018 deaths.  This comes after a “mild day” of 37,000 cases and 480 deaths.  While AZN has restarted its UK trial on its vaccine, the US trial remains halted until at least mid-week after while the FDA investigates a severe neurological problem in one of the trial participants.  In FL there has been a 26% increase in cases among children in the month since school began again.  In MI, MSU has ordered the quarantine of all fraternities and sororities after hundreds of cases have been found in those groups.

Globally, the numbers rose to 29,474,968 confirmed cases and 933,423 deaths.  In the UK, there is a test shortage causing people to travel hundreds of miles or (as had been the case in the US a month ago) wait weeks for results or both.  This comes as the UK is only processing 200,000 tests per day.  In Austria, cases are rising as their government warns of a second wave starting.

Overnight, Asian markets were mixed again, but leaned toward the green on moderate moves to either side.  Thailand and Malaysian were the only countries to move more than a percent positive and Indonesia the only one to move more than a percent negative.  The major bourses moved about a half percent to the green except Japan which did the opposite.  However, in Europe we are seeing green across the board so far today.  The FTSE leads the big 3, up 1% with the DAX and CAC seeing much more moderate moves as of mid-day.  In the US, at 7:30 am, the futures are pointing to another gap higher at the open.  The NASDAQ is leading, implying a gap of nearly 1% while both large-cap indices imply a gap up of 0.70% as of now.

The major economic news for Tuesday includes August Import/Export price Index and NY Empire State Mfg. Index (both at 8:30 am), and August Industrial Production (9:15 am).  The only major earnings reports on the day are ADBE and FDX after the close.

The lack of follow-through after Monday’s gap has not dampened bull spirits.  It seems another gap higher is in the cards this morning.  However, remember we don’t have a bullish trend yet (on the daily at least) and we are still inside that bottoming area that could go either way.   Perhaps the markets are waiting on more news from the Fed or Congress, but we have the 50sma below and the top of the bottoming congestion above acting as at least temporary limiters.

Be careful of volatility.  Stick to your plans.  Follow the trend and don’t chase moves you have missed…there will be another one soon.  Hang in there with your rules and keep locking-in profits.  Remember, trading is a job, not a lottery ticket. 

Ed

Swing Trade ideas for your Consideration and Watchlist: SYF, HWM, CFG, JCI, AUY, JETS, LYV, DRI, WKHS, KSS, FSM. 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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