If you thought you were going to get any relief from last weeks drop in the markets, you had a shock when you woke up this morning.
Indexes are off 1.5% on the average, @CL is off 1.25% , TLT is +1%, and Vix.x is +20%.
This is a very negative premarket. One of the most negative I have seen in a very long time. So what is going on to precipitate this sell-off?
- Trade talks with China. Instead of any breakthrough, it’s just getting more stonewalling from China. They are entrenched for a long drawn out fight. This alone would not be a huge factor but combine that with the House failing to approve the trade agreement with Canada and Mexico, The EU far from being in the U.S. corner, and a world has gone mad, market participants are very nervous as to what is coming.
- Two shootings over the weekend in the U.S. With both political parties posturing over gun control rather than sitting down together and fixing the problem. The spin for the last 2 days is to blame it on the White House when in reality its the media and the lawmakers that share the lions share of the responsibility.
So the rhetoric ratchets up, the same rhetoric that created the atmosphere that has been fostering this violence. Humans are now in a mob mentality here in the U.S. And it is not pretty. Common sense and logic are now gone, and its rule by the Mob.
Much of this is ginned up by paid operatives, and much is created by people that have been gaslighted 24/7 by the media over the last 2 years. In a sense, I do not hold the people I see that have lost their minds responsible. Not many have the reasoning abilities to withstand 24/7 gaslighting. It takes a seasoned mind, a mind of a professional gambler:), to see through the mist.
But the bottom line is, for whatever reason, the media and the U.S. politicians are hell-bent on creating civil unrest to a degree never seen before in the U.S. It is only going to get worse.
The markets are watching in horror, as I assure you capital is watching. If the U.S. falls into chaos capital will leave the U.S. markets at a record pace. Just like we are seeing right now in China.
3. The geopolitical environment is just as big a mess. Everywhere you look there is a similar battle going on in many countries as the U.S. Combine that with China, Russia and Iran stirring up the pot and things can get out of hand quickly.
The above is the short version of how I see the various factors affecting the markets this morning. It’s not the purpose of this site to turn it into a political forum. But merely to look at things as an outsider looking down at the world. And then share my views, along with what affect the various events might have on the markets.
For now, its a question of watching to see how far down the market goes. I have a 1/4 position in SPY as a mean reversion trade, and I am not rushing to put on my second 1/4 position. Other than that I am pretty much out of the equity side of the markets right now.
The NFL is rapidly approaching and I am working up a special for the NFL regular season. I will have that up and sent out by Wedn.
As a part of my sports handicapping subscription, I send out almost all of my trades via Viber. This has been a nice value-added feature of the handicapping service. At $49.00 a month for all sports plays I handicap, you get most of my stock trades. With the NFL almost here, its time to consider joining us.
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.
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Good Luck Today
RickJ’s Handicapping Picks