I made the comment yesterday on my free private twitter feed, @rickjswings, that when the fed indicated a softening of their position on rate hikes and the market did not react that this indicated a bit more downside to the markets.
One of the best indicators I have found is how the market reacts to news. Logically markets tend to go up on good news and down on bad news.
The exceptions of course are :
1. The concept of selling the news. This means usually a big run up or run down in anticipation of news. The news comes out as expected and the market sells off. This is fairly common.
2. Not included in the above are markets that just do not react “logically”. I am sure you have heard the saying that in a bull market there is no bad news and vice versa. That is the gist of my comment.
So yesterday with the markets oversold and the fed taking a more dovish position you would have expected the markets to rally sharply. I know I did:) But they did not. Even with Apple having a monster day the SP500 could not produce a rally.
So the conclusion one should reach is that there is more downside ahead. This of course is not a 100% indicator. Nothing is 100% but it is sufficient enough to consider it a very short term bias.
Now if you get 4 or 5 of these in a row, then perhaps you can consider a trend change.
So far the CEO of starbucks must be loosing a bit of sleep getting the company into the fray of a heated political issue. The stock after a bad report on friday which sent it tumbling, now is getting sold off hard as a result of the countrywide boycott that is in the works.
If they sold a unique product perhaps this boycott might have the potential to be crippling. But they sell coffee! That is in retail terms a “commodity” product. Anyone can sell it. You can find it everywhere.
Starbucks built up its brand based upon excellent PR, advertising and creating good will around the world. So for the CEO to put its company in the middle of what purports to be a very brutal social and politicial battle with both sides taking very hard dogmatic positions does not bode well for the company.
As soon as I heard what the CEO did I bought some puts in SBUX and am being rewarded.
Will I participate in the boycott. Of course not:) Remember I have no set in stone ideology. This boycotting of business’ and in some instances states because you do not agree with them is damaging and if carried to the extreme can cause irreparable damage to the U.S. both home and abroad.
I am long GLD and GEO and both have been paying off consistently. Most swing trades that I take last 1 to 7 days.
GEO has been over 1 month now and still going steady to the upside. GLD is a system trade I have been taking for a number o years now. It is one of the better automatic systems I trade. Nice to see GLD up over 1% this morning:)
In addition have a 1/4 mean reversion trade in SPY through SSO. It was looking like another quick 3% yesterday but then the market softened. If we get a selloff today I most likely will add the next 1/4 of the position either right before the close or in after hours.
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