Its pure carnage this morning 60 min before the open with the stock market indexes down from 1.5% to almost 2%.
Everything red except TLT and Metals. This is a very negative bias. So negative that if we get a washout to the downside today I most likely will be adding to one of my 1/4 unit mean reversion trades. It will probably be SSO.
Its all about China this morning. It looks like the trade war is on with China taking a hard line approach so far in response to the U.S. Tariffs. In addition, yesterdays rally was triggered by fake news that Trump was fine with Amazon. Turns out it is business, as usual, bashing Amazon so down we go!
Then, of course, we have the southern border where the military has been dispatched to help control the borders.
All of this without Congress in session. I imagine when they get back that they will be in full speed exacerbating whatever problems are happening.
Whats interesting in all of this is that while the U.S. descends into chaos, Trump’s approval ratings continue to climb:) I have always said that Trump does his best when things are chaotic and he is proving that now.
We then have N. Korea talks around the corner to add to his plate as if the problems at home were not enough. Then after that Iran who knows what else is in store for this administration. And they are doing all of this while being assaulted by both parties.
So its no wonder the markets are finally tanking with all that is going on. Like I said it is all about timing. I was about 6 months early in predicting this turn but a turn it has been. What will be interesting is how the markets react when it takes out the previous lows.
Usually, that can be a turning point as the weak players in the markets will be either broke or disgusted and have sold everything. Then what happens is the sharp players start buying and we rebound with a double bottom in place.
Will that happen this time? Interest rates are still low, business profitability is great, regulations are cut dramatically, and the public has received tax cuts. So the stage is set for a nice rebound when a negotiation or a rumor of a negotiation between China and the U.S. on Trade. I suspect we will see that in the next 2 to 4 weeks.
Trump has it correct that the U.S. is in a better position than China to win a full-fledged trade war. The problem, however, is that elections are around the corner and who knows how the public is going to weigh in.
Interesting times to say the least. As I am writing this the markets have even softened a bit more.
I exited my AMTX trade yesterday for a small gain. That trade has been as reliable an in and out trade as one can get. All from the long side while the markets are taking a hit. Not a losing trade yet in the stock. The range low, however, keeps getting lower. We are now at 1.55 for an entry target on the stock which may get taken out today with IBB getting hit hard this morning.
All you can do is keep a clear head and weather the storm. Panic never helped anyone think clearly.
As they teach you in instrument pilot training. If you find yourself in a full spin you use aileron and rudder control at its extremes to attempt to pull out of it. And its extremely difficult to pull out of a full spin in a small plane, but considering the alternatives you best give it all you got:)
With that, I a going to peruse the carnage and see if there is an opportunity out there this morning!
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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