Another sideways day in the markets on Thursday. The markets are gapping up about 1/4% an hour before the open.
Nonfarm payroll numbers just came out and appear to be positive for the markets, so far.
Of note, Financials strong, TLT, Metals, and Oil weak.
A positive bias premarket as long as financials stay strong. If they slip the market is heading down today.
I have 2 trades going right now, both mean reversion trades. CSX had a big day yesterday up a bit over 2% and in premarket +1.14%. I will be exiting the stock today. It will all depend on the breadth. If we have a chance for a trend day up today I will stick with it, if not, then will exit early.
SSO, which is the 2X long trade in the SPY is + 1/2% this morning. I also am going to exit similar to CSX.
CSX is what you see in typical mean reversion trades. Rarely do you catch the turn exactly. But usually when the stock does turn it has the potential to move rapidly as we are seeing in CSX. Over 3% in 2 days. So, typically you take some punishment early.
Occasionally you take a big hit. It comes with the method. When you back test out your mean reversion trading, it’s as clear as can be if you attempt to limit the downside you lose a significant amount of EV. The idea is to use filters before you get in that reduces drawdown without decreasing EV.
Some news hit the markets late Thursday that the Special Counsel has convened a Grand Jury. That should come as no surprise, as it is almost a certainty that they are going to bring charges against the President. The fact that the attorneys that are hired are mostly made up of Obama/Clinton people and they made sure venue was in DC makes it clear what their intentions are.
If you want to know the risks here just take a look what Alan Dershowitz or Johnathan Turley have to say. Both are constitutional law experts and both are liberal Democrats. What they have to say is ominous.
In addition, what is very telling is that the Senate Republicans appear to be in favor of the special counsel as much as the Democrats. A bill has been floated to hinder Trump or anyone from firing the special counsel without court approval. A bipartisan bill as they say.
It’s interesting the Senate can get together a bill to restrict Trumps powers but cannot get off first base on health care.
I have no dog in this cutthroat game. But the effects this eventually will have on the markets has the potential to be devasting. We are heading full speed ahead to a constitutional crisis. One that the U.S. has never seen before.
I do not think many have thought out the potential implications of this.
But, again, I implore you to not get overextended in this market. Ideally, you want to wait until the special counsel is no longer hanging over the Countries head.
As I see it the chaos in DC is on ly going to get worse. The Senate Republicans do not even hide anymore their desire to remove Trump from office.
Some new odds were posted overnight.
Whether Congress enacts the RAISE Act in 2017 is 8 to 1 against. That seems low to me. I would put it more in the neighborhood of 100 to 1 against.
Manchin reelection chances are 2 to 1 in favor of reelection. Take the 2 to 1. Should be no more than even money.
Flake reelection is 6 to 5 in favor of reelection. Take the odds, I view it as 3 or 4 to 1 against. And I am being conservative. Maybe 10 to 1.
I will keep you up to date on any new political wager I like. It is very interesting to watch the odds and then make your guess what they should be.
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
