A new year for the stock market! Can the markets dodge the upcoming missiles?

The stock market is starting the New Year just as it left off last year, a gap up over .25% an hour before the open.

Of note, Dollar, TLT, IBB weak while most everything else is strong. That looks like a very positive bias to me for the stock market today.

Beware, however, Congress is back in session tomorrow. That means more chaos in store for the U.S. and the markets.

Now you would think logically that Congress would be a great stabilizer for the country. Individuals selected by the people to pass laws that benefit the Country. That work together to compromise their differences as after all its only through compromise that things can get done.

And then you have a DOJ that makes sure that law and order are enforced throughout the country, as a Democracy only works with Laws that are uniformly applied to all people and enforced.

Then you have the judicial system to interpret the laws so that they are fairly applied and meet constitutional standard.

Finally, you have an independent executive branch that overlaps in some degree with Congress to assure that the country is safe and secure.

So what could go wrong with all the checks and balances the U.S. has in its Country? Afterall, isn’t it one for all and all for one:)

Two things have gone wrong this last year, and for that matter years leading up to this year.

1. Politics. The participants treat politics like it is a 0 sum game. There is no middle ground only winning and losing. And in today’s environment its winning no matter what the cost and whatever it takes.

Honor, integrity, welfare of the country are disregarded for deceit, spin, deception, greed and of course power.

2. Humans. I have always thought that the human race is a flawed species. Looking back over history the amount of wholesale killing that has taken place is astonishing. It’s a big question mark whether humans are capable of governing without destroying each other.

Perhaps Max Von Sydow can state it much clear than me:

Now, I say this at the start of the New Year as it sets the backdrop for 2018. As this is what we are dealing with as we enter this year.

There are so many minefields for the markets that it will be astonishing if we have another banner year this year.

In short, the plus side is the policies that the new administration are pushing. Lower taxes, sharp reduction in regulations, energy independence, a more balanced trade to name a few.

On the minus side, there are too many to mention. But the biggest I see this year is 1. Geopolitically its the Iran, N. Korea, Russia and China dynamics. 2. on the home front it’s the ever-increasing political dysfunction as evidenced by the “independent counsel”.

Either one of the above two could create a serious problem for the U.S.

I do not see either of the above problems to resolve this year. The geopolitical situation is so complex it’s going to take some time to see how it all unfolds.

The dysfunction on the home front is going to get worse if that is possible. If the independent counsel comes out and says no collusion and the president is clear it will not solve a thing. On the other hand, if he comes up with charges against the president, you will also hear the same thing from the president’s supporters.

Nothing will get resolved by the independent counsel except a lot of money spent and regardless of the outcome, even more, division between the American people.

The only thing that could turn this around would be leadership in Congress. The chances of that happening are next to 0. If they did not get the message when 30 Republicans almost were massacred on a ballpark, then they will never get the message.

That means the potential for a lot more volatility this year. If you’re a swing trader you need to be aware of this and adjust your position sizing accordingly.

As we enter this year the trades that I am still holding that I have shared are TUR, a bottom reversal trade that is still looking good. We have a 10% gain in the trade. GLD a system trade, that is looking good and is up almost 3/4% premarket. And XNCR a trade I got married to but am still optimistic on the trade.

This morning I have several setups I might trade on the long side. They are mean reversion trades.  And also a basket of potential bottom reversal trades.

In addition, I spent the weekend, in between handicapping the ball games setting up a methodical approach to these mean reversion trades. I plan on taking more of them this year. And I plan on sharing most of them on my private twitter feed.

I plan on using a two-step process. 50% for the first trade and the other half for the second.

Come join me this morning for the open on Twitter:  @rickjswings

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

RickJ’s Handicapping Picks

rickjshandicappingpicks.com/investing

Skype: riccja

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