We seem to be in freefall now for the stock market with the factors influencing the markets:
The perfect storm so to speak. The first of course is top on the news cycle right now. Headlines are talking about trade wars and the consequences when in reality negotiations are still ongoing with China.
As we have found out, Trump is a hard-nosed negotiator willing to make good any threats. But the fact remains, the negotiations are far from finished. My guess is China works out a deal that precludes a trade war that is acceptable to the Trump administration. Let’s say 2 to 1 in favor.
Once a deal is made, the market will skyrocket to the upside as a response. I would not be surprised to see a +1000 pt day if that happens. But its the timing of course:)
Number 2 is a complaint I have had from a long time ago. Why these Fed Heads feel the need to publicly give their opinions knowing that they move markets are beyond me. In addition, much of the time their statements change with the wind.
Certainly testimony before Congress is appropriate for press coverage. But what we have now is uncontrolled Fed Speak that comes at us randomly. Not good for the stability of the markets. And never has been.
Finally Mueller. As we have found out so far the press coverage produces a different reality than what is actually happening.
How this is happening is most likely a combination of leaks and manufactured stories for political ends.
Nothing describes it better than the last round of indictments along with Rosenstein’s statement. Combine that with a sitting Democratic Congress requesting Mueller not give his findings until after the midterms and you start to get the picture.
But as long as the mainstream media is obsessed with bringing down the President these leaks, manufactured or real, are going to keep shocking the markets.
If you are caught up in the hysterical media frenzy, my condolences. I know that it can produce an untold amount of stress aside from irrational behavior. The only way out is to find reliable news sources. An almost impossible task these days. But essential if you are going to keep a clear mind when trading.
All three of the above have the ability to produce shock waves in the market both to the downside and upside. Near-term the China deal is top on the agenda. Then we move on to the Fed and Mueller.
Remember, The new Fed Head is not even close to Bernanke. The days of quantitative easing at the drop of a hat are most likely gone. So that avenue of saving the markets, for now, is closed absent a system shock.
I added a few longs that are mean reversion trades yesterday. Both it looks like being early. I have a 100% position in SPY via SSO and a position in INTC.
I will be managing them today along with looking for another mean reversion trade.
The markets are gaping down almost 1% this morning with most of what I see in the Red except for metals.
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