Wednesday was another massive whipsaw way.  All 3 major indices gapped at least a percent higher at the open and then followed through as Fed Chair Powell and Tres. Sec. Yellen testimonies turned up nothing market-moving.  However, in the late morning a case of the omicron variant was identified in California and a selloff started.  As scalpers, profit-takers and stops kicked in, the selloff turned into a rout.  This left us with upper wicks that had challenged (and failed) the downtrend line over big, ugly black candles in all 3 major indices.  It also made for the largest 2-day drop since October 2020.  On the day, SPY lost 1.10%, DIA lost 1.29%, and QQQ lost 1.69%.  The VXX rose 7% to 27.30 and T2122 fell even further to a very oversold 1.63.  The 10-year bond yields fell to 1.424% and Oil (WTI) dropped another 1.5% to $65.18/barrel.

As was mentioned, the first case of the omicron variant was identified in CA.  The person who contracted it was fully vaccinated, but it is worth noting that, so far, the patient is only experiencing mild symptoms.  However, President Biden did tighten travel restrictions and mask mandates again as part of his plan to fight Covid.  

After the close, FIVE and SPLK beat on both lines, while SNPS beat on earnings, but came in in-line on revenue.  However, PVH beat strongly on earnings but came in light on revenue.  In neon-earnings news, DIS replaced their long-standing board chair (Bob Iger) with Susan Arnold.  SQ also changed its name to Block (as a signal they will move to work more on crypto).

This morning DG posted beats on both lines.  The company also announced plans to open 1,000 “Popshelf” stores aimed toward a younger and wealthier demographic than has been the company’s target to date.  The stores are scheduled to all be in place by the end of fiscal 2025.

Overnight, Asian markets were mixed, but leaned to the up side.  Japan (-0.65%) was the clear loser on the day while South Korea (+1.57%), India (+1.37%), and Indonesia (+1.17%) led the wider-spread move up.  In Europe, markets are red across the board at mid-day.  The FTSE (-0.90%), DAX (-1.54%), and CAC (-1.28%) are leading the way lower on renewed Covid (omicron variant) fears in early afternoon trading.  As of 7:30 am, US Futures are pointing toward a mixed open.  The DIA is implying a +0.67% open, the SPY implies a +0.37% open, while the QQQ implies a slightly red -0.04% open.  10-year bond yields are up only slightly and Oil (WTI) is up two-thirds of a percent in early trading.

The major economic news scheduled for release Thursday is limited to Weekly Jobless Claims (8:30 am) and 3 speakers (Fed Member Quarles at 11 am, Fed member Bostic at 11:30 am, and Fed member Daly at 11:30 am).  The major earnings reports scheduled for the day include CM, DG, EXPR, GMS, KR, SIG, and TD before the open.  Then after the close, COO, DOCU, JOAN, MRVL, and ULTA report.

Yesterday’s action was just another case of the whipsaw that continues over the last week. Volatility is likely to continue as markets adjust to the idea that the Fed will focus more on fighting inflation over the next year. As said before in this blog, nimble scalpers are in heaven with this many intraday swings. However, this makes for an extremely hard market for swing traders to be successful. So, if you don’t trade hedged and you are not extremely quick to be in/out, it’s past time to consider stepping back and waiting for a trending and less volatile environment.

Remember, you don’t have to trade every day or week. Focus on the times when the trend and chart setup gives you have an edge. Stick to your trade rules and on managing the things you can control. (Not trying to force the market to obey your desires.) If you do trade, that should always 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: No stock picks this morning, but members can see them in the trading room at 9 am. 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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