I know what Powell and his gang must be thinking this morning. It must be time to raise rates before the U.S. economy runs away and causes uncontrolled inflation.
No doubt they view the rising tensions between China as a blip. The Dems taking over the House with non-stop investigations into the White House an inflation booster.
The political machinations of closing plants in swing states to affect 2020 elections as just a mere outlier.
The 2 day drop in the dow from Tuesday through the open this morning of almost 1400 points as normal market behavior.
And the inversion of the Yield curve as a mere blip in the data.
There is good news in all of this. When the Fed is done there will be no economy for them to regulate and they will have to close up shop so the U.S. can start from stretch again.
For those of you that are critical of Trump for blasting Powell, my thought has been he has been very tame. I would have fired Powell a month after I appointed him. It was obvious he was not the right man to be at the helm to have a monetary environment for what Trump wanted to accomplish for the U.S.
So where do we go from here? Who in the world knows at this point:) But its clear, the fed is not going to save the markets this time, as they have so many times in the past.
All you can do now is tighten up your swing trading requirements, and in addition, tighten up your mean reversion criteria. At least until we see the Nasdaq start leading again.
Historically this is as good as it gets for the stock market between now until the end of Dec!
So I insane that I am will be looking to start a mean reversion trade today. Not sure of the timing. But as I see it its time to start positioning for a reversal.
The bigger the down day today the better a mean reversion trade will look. So its a question of timing, as always:)
There is a lot of interesting developments on the political front this morning, but for some reason, I am not in the mood to give any political views and their effects on the market right now.
In addition its an hour before the open, and I need to get to work:)
But before I get back to my computer screen, let’s look at the lay of the land:
Indexes gapping down about 1.5%, financials off about the same, Oil off around 2%. The only green I see is TLT positive about .5% and the U.S. dollar up slightly.
Not a pretty sight. The things to watch this morning are 1. A double bottom on the 5 or 15 min chart, or a continuation and a move lower.
I typically do not trade the first move lower but look for one of these two setups which usually on a 5 min chart shows up in the first 30 to 45 min.
And that pretty much holds for the continuation lower. Or as some call it, a bearish flag.
In the past, at these times you would have Bernanke flooding liquidity into the markets as insurance against the worst.
This fed does not even have that under consideration. Before they will even think about liquidity is either when Trump is gone or Powell is fired. Whichever comes first.
Enjoy the carnage today. If you have been careful, and not over-invested, this will pass. If you have been doubling up, and throwing caution to the winds, you most likely will have nothing to worry about soon, as you will be broke.
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
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