What caused the Nasdaq to fall 150 pts on Friday??? A blip or a warning flag??

The markets are about unchanged this morning 45 min before the open with the exception of QQQ which is off .8%.

Of note, Oil is up and most everything else is hovering around the 0 mark.

One chart I watch is the Nasdaq Sp500 relative strength on a weekly basis.

As I mentioned a number of times when the Nasdaq leads that is a buy signal for the markets. Historically this has been a very good filter for being in and out of the market on a short-term basis.

This triggered long on Jan 6th at 2276.50. The threat of it reversing has not really been a factor until the close last Friday. So this week will be interesting to see if we get and exit signal at the close on Friday. The gain so far on this trade is 130 pts in the sp500!

I will keep you updated toward the end of the week on this. This is one of the few studies I place a substantial amount of weight on.

At the close on Friday, I bought IGE $50,000 worth for a trend reversal trade.

These trades have the potential to produce large gains but also have a larger chance than most trades to get whipsawed for a small loss.

I am also looking at another trade today depending on how the market looks and what the stock is doing. The stock is DPZ and I will keep you up to date on this trade when and if I make it.

On the news front, we have the FED on Wednesday. The consensus is there will be a rate hike. We will see:)

As far as home and abroad things are unchanged.  The insanity of U.S. politics continues unabated by Comey’s testimony that Trump was never under investigation for collusion with Russia.

This raises an interesting question, however. If the Gang of 8 knew this, why then did some in the gang of 8 publically state there is indeed evidence of Trump collusion? While others simply said nothing.

And in addition, since Comey leaked a document for the sole purpose of getting an independent counsel appointed, should the decision to appoint one now be reversed?

Typically the decision to appoint an independent counsel takes an enormous amount of time before that decision is made. But here, Comey leaks the document and the very next day Rosenstein appoints one. Knowing that Trump himself was never under investigation by the FBI.

Now, I know the argument now is obstruction of justice as opposed to collusion. But as most experts indicate obstruction is not close to an issue here. After all, Trump as far as we know did not delete 33,000 emails, take a hammer to his cell phones or use bleach bit to erase hard drives:)

Now I bring this up not to argue the merits of either side, but only to accentuate that this is not going away. Forces are at hand to take down the presidency by whatever means necessary. It matters not the merits as at the very least the strategy is to hamstring the president from doing his job and to assure that Trump under no circumstances has a chance to serve a 2nd term.

That means it is going to be an uphill battle for Trump to get any of his agenda through Congress. The Senate is close enough that the never trumpers can thwart his agenda. And I suspect that is what they will do in the Senate.

So, tax cuts, health care, infrastructure and the wall are long shots at best.

Just as many Republican never trumpers would have rather seen Clinton in the White House many would rather see the Democrats win and they lose in 2020 if Trump leads the ticket.

The essence of this mishmash is the Stock market is on thin ice here. Not only the event risk of a Trump removal exists but the injection of these programs to boost the economy is minimal now.

Combine this with the Fed who seems to have their blinders on and hell bent on raising rates in this environment after the slowest recovery in our history has been recorded.

To see the idiocy of it all one needs to do is compare Greenspan and his Y2K liquidity actions to what the Fed is doing now where there are real substantial risks to the U.S. economy.

So be very careful in this market right now. A news driven event (whether true of false) could propel this market much lower quickly.

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

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