The Stock Market is gaping down this morning with all indexes off about 1%. That is a big gap after a 3-day rally.
I am out of all mean reversion trades now as I exited my last in QLD yesterday.
If your trading mean reversion right now its been a tough environment. We have weathered it well however with only small losses in our last index trades despite big swings every day.
Now it’s waiting for an opportunity to enter more mean reversion trades but we are away from that right now.
The news immediate news now is the White House is proposing more Tariffs on China and China ratcheting up the rhetoric regarding retaliation.
These are going to be tough negotiations. But be assured there are negotiations going on.
But of course, for the most part, the White House is going it alone on these Tariffs. The Dems are gleeful thinking that this will erode his base, especially in the farm belt. The Republicans are in shock not necessarily because of the results of the midterms but more because of what effect this will have on the special interest money being paid to them to assure that this would not happen:)
Afterall they are getting paid to assure it will be business as usual with China. And rest assured there are billions flowing into the coffers of Congress to influence them regarding trade with China.
I expect the rhetoric from Congress to reach a fever pitch before this is over.
The way I look at it is if Congress and our career politicians are unhappy that is a good thing. Things need to change and if the White House is successful in their negotiations with China it will be a step in the right direction.
But for now, the markets are going to feel some pain not only because it does not like trade wars but also because of the uncertainty of what is next. Congress is not helping, as they are only exacerbating the uncertainty.
Remember Congress is back Monday, expect some fireworks when they get back. Nothing motivates them more than a threat to their special interest money!
For today also we have the March Jobs report. I doubt regardless of what the number is it will turn the market around today. If the number is bad, look out below.
It’s amazing how things have changed since a few months ago when the markets were going straight up. As if it would never end:) Well, its ended for now.
The only question is will this be a pullback or a change in trend. It’s too early to tell as there are still a lot of positive economic developments in the U.S. We are nowhere near a recession.
This fight with China is going to get resolved. And when it does I suspect we will see the market skyrocket higher. Its a question of timing however and if you can get it right there is a lot of money to be made. But who knows what is going on in the Backchannels between the White House and China.
I suspect if we get some lull in the rhetoric that might be an indication that a deal is in the works. Right now, however, there is new rhetoric by both sides every day.
So today it is just waiting and see how far down we go and look for mean reversion opportunities.
If I trade I will post it
Good Luck Trading today
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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