Monday was carnage in the markets. The market was overbought, but the trade talks with China was the precipitating factor for this decline.
Now overnight, Trump as tweeted out a few positive things about the trade talks and we are now looking at a 3/4 to 1% gap up in the markets this morning.
However, TLT is only off about 1/5% along with Crude off about that.
I would think we are not out of the woods yet on the downside. I expect at least another test of the lows. But a bounce could be in the cards the next few days, and is very likely.
I do not see any reason to play a gap trade either way today.
I put on the 2nd position of my SPY mean reversion trade yesterday. I also exited two swing trades as my stops were hit. On swing trades, I rarely do not take stops. On occasion, the trade has a high EV of a mean reversion trade at the time a stop is hit, but that was not the situation in these two trades.
There is a lot of news out this morning about senior officials saying how the talks are dead this year. A word of warning, unless you hear it from the official consider it fake news. In this charged political environment, you should never deviate from this rule.
Those statements have 0 meaning. So do not use them in your decision making. In addition, you also have to take with a grain of salt what administration officials are saying. As much of what they say is for leverage in the negotiations.
The bottom line is that unless you are privy to the information first hand, or have an investigative reporter that is solid, forget it.
On the political front not much has changed. There was news out yesterday that Barr assigned a US Atty to investigate into the origins of the Russia hoax. That is a positive, as the U.S. Atty is one of the best, and America needs to be told the story.
In addition, if there was wrongdoing, people need to be held accountable. My guess is we are going to see accountability for the first time in a very long time. How far up the chain it goes, remains to be seen.
But, I suspect this will further exacerbate the rhetoric (if that is possible). The media spin has already started on this. So expect 24/7 that Trump is targeting his political enemies. Pretty rich after what has been done to him and his family the last 2+ years.
On the international front, nothing has cooled off. The rhetoric of war is continuing in the Mideast. Iran is not ramping down their talk, and are expanding their missiles into Iraq. We can thank Bush for that one.
There is an alliance in the Mideast, where it appears Iran and Iraq are on the same side. It’s all pretty complex and beyond the subject of this site. But the news this morning is many oil sites of the Saudi’ have been under attack. I doubt the U.S. and Israel will sit back and do nothing. As they are now both aligned solidly with the Saudi’.
So just another wildcard that will be a catalyst for volatility in the markets.
A good article I read this morning regarding Trump’s trade policy with China :
This site is an excellent site for political analysis. They typically give a detailed analysis backed by facts and logic. They are correct much more often than most other analysts. But remember no one has been 100% predicting the last two years.
As a part of my sports handicapping subscription I sent out almost all of my trades via Viber. This has been a nice valued added feature of the handicapping service. At $49.00 a month for all sports plays I handicap, you get most of my stock trades.
If you want to follow some of my trades along with my thoughts typically given after the open you can go to @rickjswings. Typically I talk about the overall day expected with the markets and also give some levels on the ES and NQ for failed breakout scalping.
It’s my private twitter feed for the stock market and its free. Sports Handicapping is the subscription-based part of this site. But considering the cost of joining it’s almost free:) In addition, I share all my short term swing trades to subscribers.
Good Luck Today
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