After Tuesdays Stock Market Plunge the stock market is slightly down this morning an hour before the open.
Of note, Metals and TLT are solidly in the Red.
This to me is neutral to slightly positive bias.
There is a lot of speculation on what caused the selloff yesterday. The leading theories are interest rates and trade. That seems reasonable to me.
But it seems that it was overdone if those were the factors. There was positive news on Trade in that China has now asked that a delegation lead by Mneuchin go to China to hammer out a trade deal. My guess is that we will see a deal long before Tariffs take hold.
Interest rates are a problem. But there was not much different than what has been happening the last few months. The idea is that the Fed is going to raise rates based on the inflation numbers they use. Unfortunately, this model does not take into consideration the political dysfunction we are seeing which should offset to some degree this worry.
Right now we are not at a point in the stock market where I am ready to begin mean reversion trading. We are out of the sweet spot for the stock market and heading into May. In addition, the QQQ/SPY indicator is on a sell signal.
Time to be a bit more conservative taking these mean reversion trades. Saying that, another big down day today will get me interested:)
Things to look for for the rest of the week:
1. Pomeo and German ambassador confirmation votes in the Senate
2. Senate nuclear option on the table
3. More FBI text messages coming out today
4. News on VA head appointment confirmation
That is the top of the list I can see. But there is always the chance of something shocking coming out via the media to worry the markets. That’s a risk that will be with us for some time now.
If I take any trades I will post them on my private twitter feed 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’s Handicapping Picks