The markets are gaping down again this morning several hours before the open ( Yes I get up very early in Las Vegas):)
Some things to note this morning:
- $VIX.X is positive .90% This is gap fill territory. Its not that good at predicting reversals unless you see a move to say negative 10%.
- TLT is only +.20 % This is less then we have been seeing the last week on the plunge.
- On the negative side QQQ is off about 1/2 % leading the way on the down side.
- A very positive sign is @CL is + 1.15%. Crude has been plunging with the markets.
So far it looks like we may get a rest for a bit on this plunge lower. I do not think it is finished however. The news is not good.
First we have Google. They have finally been put front and center by the DOJ into some of their practices. I suspect the deeper the investigation gets the more abuse that will be found.
Second, FB just got caught doxing a customer. I think a DOJ investigation of FB is right around the corner.
To me that means very shortly tech is going to take another hit. And a big one. They have been allowed to concentrate power never seen in corporations before, and have wielded it without regard for the consequences. It has the potential to get very ugly. Congress will not be able to help them this time.
Next, we have no fewer six house investigations on President Trump. And that is after the SC report essentially cleared Trump of wrongdoing. Now I know this is a controversial statement, but as a trial attorney for some 30+ years, when a prosecutor does not recommend charges, it’s over.
And if you do not believe me both Turley and Dershowitz, my go to experts for constitutional law, both agree. And both are very critical of the way Mueller and his team has handled this.
They are both liberals, they both are not Trump supporters in the sense that neither voted for Trump, but they are both true to the law and their principles.
Irregardless, the house leadership, is continuing on with the investigations. This will further divide the country (if that is possible) and will further promote uncertainty for the markets. The ebb and fall of the news cycles wrecks havoc on the markets.
Then we have Barr and Durham. For the first time it appears that the people that started the Russia hoax are going to feel the heat. I am not going to predict anyone is going to be brought to justice, but for the first time I see that as a possibility.
If history is a guide, everyone will skate. But, Barr seems like a different animal. And appointing Durham to me means he is dead serious.
So again, more uncertainty as this unfolds. Which means more volatility.
Then we get to trade. The dirty word Tariffs:) Trump uses it as a tool rather them isolationism. So the naysayers whose arguments are that Tariffs are bad, are only addressing in the terms of isolationism, not in terms of helping solve problems.
In my opinion, that is where their analysis goes wrong. Unless, you address the root problem that is causing Trump to put on the tariffs, and evaluate the effectiveness of the strategy, then you really are not putting forth an accurate assessment.
I view it in the same way I view sanctions, as opposed to viewing it as a means of isolating the U.S. A good example is China. They have tariffs, and they have them for protectionism, not as a means to resolve issues. Therein lies the difference.
Will these tariffs have an affect on the U.S.? Of course, in the short run. But Americans need to learn that this is the lesser of the many other evils. Do you allow China to continue to steal intellectual property rights? So you continue to allow China to keep dumping Steel through Canada?
The long run pain from that will be far worse then the short term pain caused by using Tariffs as a tool. And since when have Americans not been willing to sacrifice a bit for American values?
For the first time an American President has been using Tariffs effectively as a tool. We see now that Mexico is going to have to make a choice. Tariffs will ruin Mexico. And the President of Mexico knows it.
But, look at NAFTA. Its been renegotiated to the benefit of the U.S. Looks at NATO, the countries are taking some of the burden off the U.S. for the first time. Look at the climate accord, it was a sham from the start, meant to enrich certain people, and let some nations completely off the hook. Finally other countries have woken up to what Trump saw from the beginning.
The bottom line is all this change, is creating turmoil for the markets. And yet, the markets are up over 6% this year and +35% since Trump took office.
Finally, you get the arguments, from the left and the media, that Trump’s own party is against many of the things he is doing. This is pretty disingenuous to use the GOP selectively when you bash them at every opportunity.
Be that as it may, The GOP has a vested interest in the status quo. Many have strong private dealings with China, and Mexico. Some are legit some are not. Many of the GOP get special interest money from foreign interests. So naturally they are going to be opposed to many of Trump’s policies, even though they help the U.S.
Our political system has been designed that way. And to change it you have to get the same people that are taking advantage of it to vote for a change:) A real catch-22 for America.
But it means that again more uncertainty as the executive branch fights the legislative branch on all these issues.
So that is a readers digest version of the back drop for the markets this morning. Its much more complex than this, but, its not the purpose of this site to examine each in more detail.
As a trader you have to have a grasp on what is going on. What that means is forget about the media. Forget all Cable Tv pundits. Pick out five to 10 real experts in their fields, and follow them to get an idea of the environment. I see some of the best traders stuck in these destructive political themes. It can only hurt their trading.
I have no particular ideology. I am issue driven. I evaluate politicians based upon what i see and observe, rather then what the media tell me to believe.
In addition, I am a true contrarian. Usually the herd is wrong. You can almost take that as a given.
My granddaughter was explaining her views on many issues to me, some of with I agreed with and some I did not. But after seriously explaining to me her thoughts she said: ” But I do not like Trump”. My only comment to her was that when all around you have the same view, you should question whether its the correct one. As usually, group thinking is wrong.
It seemed like a light went on:) But, who knows.
There are things to like about Trump and things to dislike. But, to hate the person to the degree we are seeing is a symptom of obsessive irrational thought. A trap that is not good to fall into.
The idea is to approach things from an analytical perspective rather than an emotional one. Not everyone has the ability to do that. As we say a person light themselves on fire in front of the White House last week. But many do, and many choose the emotional irrational side.
Its not easy when you are bombarded 24/7 with fake news. But, nothing is ever easy in life. And its times like these that determine what you are made of.
So, try to let your analytical side take hold, get good information, and you will become a better trader.
I will try to post more often, but between handicapping sports, and preparing for the stock market open, it’s tough to work in a blog post regularly.
I do share my thoughts for a few minutes each morning on my private twitter feed @rickjswings. Its free, and it is only for about ten min in the morning after the market opens.
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 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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