Are we having fun yet:) If you are a swing trading this stock market, you are seeing now what volatility is?
Forget for a minute what is causing it. Focus on how it is affecting your thinking. Focus on how it is affecting your emotions.
Only when you figure that out can you then move onto some kind of analysis.
Also, I would not overthink things yet. Not much has changed from 2 weeks ago. The market was due for a break. It cannot go straight up forever.
And if you want to start feeling sorry for yourself, think of the many that have a large amount invested in cryptocurrencies. This market pullback is nothing compared to the carnage there.
So where are we this morning after the 650 pt drop in the markets on Friday?
2 hours before the open we are -240 on the Dow!!! So it looks like we are going to have to wait for the recovery:)
Of note, Financials, Biotech, are taking a beating in the premarket, Metals and the dollar are positive, TLT is unchanged.
A mixed opening at best. Watch GS, breadth and the 10-year note for signs of a turnaround.
Now as to the causes. #1 is D.C. It is criminal the way the U.S. lawmakers conduct their business.
Its win at all costs, with nothing off the table.
What has brought D.C. to this point? Special interests both at home and abroad. Lawmakers are driven by the highest bidder. Its all about the money.
That is why you do not see any meaningful health care reform. Or why you do not see lower drug prices. Lawmakers are being paid enormous amounts of money to keep the status quo.
Social warriors? I doubt there are few in Congress are really Social Warriors. Whatever is the most convenient side of an issue to further their donor’s interests is the position they will take.
Now, the U.S. has gotten by with this dysfunction for some time now without serious consequences. But, the U.S. was operating on borrowed time. And it appears the time is up.
Both sides are racing ahead without regard for the consequences their actions are having on the American People. As I have said before the Public is collateral damage. Acceptable losses to affect a means to an end.
Not even 30 Republicans at a ballpark almost being massacred slowed our lawmakers down. Not even for a day! If that does not stop and make them think about their actions having consequences than nothing will.
As I see it D.C. is racing toward a breaking point. Many have positioned themselves to a point where no compromise is possible. Laws have been broken.
The stakes could not be higher. So it’s all or nothing for both sides. Either they take the President down or people are heading to prison. And as some tell it, many face the risk of incarceration.
Now that is how I perceive things. As far as which of the two sides is the correct side, who knows. One could certainly speculate, but as a member of the general public, I might have 2% of the information available needed to make a decision.
So rather than speculate, its best to recognize the reality that we are all trading in and act accordingly.
Make sure your position sized for increased volatility. These are not normal times in the U.S. You have one side trying to remove a sitting president, claiming he colluded with Russia to win an election. That my friends is treason. That is what one side is trying to sell.
This is no small issue. If there is even a hint that Trump is going to actually be removed from the presidency, these last few days will be childs play compared to what you will see.
I have no idea how all of the political dysfunction is going to play out in the end. But, for now, it does not bode well for the markets.
On friday, I put on 2 mean reversion trades. A 1/4 position in SSO and a position in NTAP.
Today, I will wait and see how breadth looks and decide if I am going to add onto my mean reversion trades. I most likely will, and it will be either early or at the close.
I will be around on skype if anyone has any questions.
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:)
Good Luck Today
RickJ’s Handicapping Picks