Waiting on the Fed

Tuesday saw another significant gap higher followed by an afternoon selloff that left us with indecisive black candles.  None of the 3 major indices were able to break out of their consolidation range of the last week.  However, 8 of the 10 major sectors were up on the day, with Financial Services and Energies being the outliers.  On the day SPY gained 0.49%, DIA was flat at +0.02%, and QQQ gained 1.42%.  The VXX was also flat at 25.02 and T2122 (4-week New High/Low Ratio) fell back to mid-point at 51.83.  10-year bond yields rose slightly to 0.682% and Oil (WTI) was up almost 3% to $38.32/barrel.

During the day AAPL announced a slew of product refreshes but added a long-awaited bundle of AAPL services (subscription to music, TV, arcade and cloud storage) for $15/mo.  Wall Street had been pushing the company to offer a subscription bundle revenue stream. AAPL also announced a fitness line aimed to compete with PTON.  On the day AAPL was flat and PTON initially dropped but recovered for a 4.19% gain.

Hurricane Sally made landfall in AL overnight.  As a Category 2 storm, the fear appears to be more about torrential rain and wind damage than major storm surge or large-scale inundation.  However, AL, and FL businesses could see disruptions from the storm.  It appears that in most measures, the West Coast fires and smoke are still the worst natural disasters impacting the country.

On the virus front, in the US, the numbers show we now have 6,788,471 confirmed cases and we have now had over 200k deaths at 200,197.  This comes after a small uptick yesterday in a still (by US standards) “mild day” of 38,286 cases and 1,197 deaths.  In a related story, the political operator placed as head of communications of HHS (the one who has changed reported numbers to fit Admin. narrative) publicly apologized for his most recent "deep state," "sedition," and related unfounded conspiracy theories that he has used to justify massaging the numbers provided by career scientists. Meanwhile, FDX reported a continued demand surge in the last quarter from pandemic-related orders. And SBUX reports same-store sales were down only 11% in August versus 2019 as the recovery continues.

Globally, the numbers rose to 29,764,825 confirmed cases and 939,962 deaths.  The OECD now estimates the global economic contraction to be just 4.5% for the year.  While this is still an unparalleled drop in global GDP, that is much better than their mid-year forecast of -6%.  In Ireland, the entire cabinet is self-isolating and Parliament has been suspended following infections and a recent test.  Meanwhile, Germany’s Education and Research Minister told a news briefing that she does not expect a vaccine to be widely available until mid-2021.  At the same presser, the Health Minister said between 55% and 65% of the population would need to have already been vaccinated for it to control the virus in the population.  In the neighboring Czech Republic they saw a record number of new cases and in France, dozens of schools have been closed in the last week as their own cases are increasing again.  Spain has also brought on new restrictions to fight its own increase.

Overnight, Asian markets were mixed again, but leaned a touch more to the red side Wednesday.  The NIKKEI and Hong Kong were flat with China and South Korea down.  The remainder (smaller markets) were mostly green.  Europe is also mixed this morning with the big 3 bourses all just on the red side of flat as traders wait on hints about the Fed statement (which comes after the European closes).  In the US, at 7:45 am, the futures are pointing to another green open.  The large-caps are implying an open up 0.40% with the NASDAQ implying a green but flat open. 

Wednesday is a big day for major economic news with August Retail Sales (8:30 am), July Business Inventories (10 am), Crude Oil Inventories (10:30 am), FOMC Interest Rate Decision and Q3 Interest Rate Projection (both at 2 pm), and FOMC Press Conf. (2:30 pm).  However, there are no major earnings reports on Wednesday.

We remain range-bound with gaps being the main move of the day. There is not a bullish trend yet, but the bearish trend has been broken. So be careful of volatility with gaps and indecisive swings controlling the market. That said, the market seems to be waiting on the Fed today. This is a bit odd since nobody expects a rate change and Fed officials (including the chair) have already often and repeatedly said rates will remain at essentially zero for years to come. So, I do not know what markets want or expect to hear...let alone what they might hear this afternoon.

Regardless, beware of the 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: CWH, DRI, PYPL, TSM, LYV, FSM, BBY, ALLY, KSS, ETFC. 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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