Is today Memo day? How will the stock market react?

It looked like we were off and running yesterday with the large gap up. But breadth started weakening and the stock market took a dramatic reversal.

In addition, we are looking at gaps down this morning of around .5% in the indexes.

Of note, the only thing looking green this morning is Oil. The rest is in the red in metals leading to the downside. Of significance, TLT is also in the red.  That to me indicates that we might get a bounce off the open.

But overall, a negative bias. Watch the 10-year note and breadth. That should give you a clue where we are heading after the first 30 min or so.

I had a rare overnight trade that comes along about 3 to 4 times a year. I bought SSO on Tuesday before the close and exited yesterday when I saw breadth rolling over. Almost a 1 % gain overnight.

I have not shared any trades lately as I have been busy fixing my computer:)  But it looks like things are settling down for now with my trading setup.

I will be looking this morning for a mean reversion trade as I think we are in the process of setting up for a nice bounce.

The big news right now is the Memo. The consensus is that it will be released today. This has the potential to be a market moving event. So be on the watch for it coming out.

As far as the memo itself, I suggest you read it rather than relying on what either side says about it. The spin will be at a fever pitch. Accusations will be flying, even greater than what they are now.

To me, it looks like we are moving into another phase of whatever you want to call this political environment. The stakes could not be higher for both sides, so I expect both sides will pull out all stops. After all, at this point, neither side has anything to lose. They have already put everything at stake.

I have been getting a number of emails concerning my thoughts on all this from a political perspective. Please do not send me those. I only comment in relation to what I see as to how it might affect swing trading.

Politically, I am an interested observer, watching humans in all their glorious dysfunction. No matter how all of this washes out, nothing will surprise me. Humans are capable of anything you can imagine and then some.

In that regard, neither side is disappointing me. When they called politics a blood sport, I do not think anyone envisioned it would ever go to the degree with are witnessing today.

The market will only ignore this for so long. And if we get to the point where a serious effort is made to remove the president, this market will drop like a rock. Most likely the biggest drop you will ever witness in the market in several hours.

Fortunately, with the options markets, you might be able to get a hint of it coming. As I have said in the past there will be people in the know and will attempt to profit from it.

So find a good Option expert that scours the options market for unusual trading. You can some good ones that give their thoughts for free online. They will be looking for the exact thing I have mentioned.

If I get wind of this I will, of course, share it with you.

Enough for this morning:) Have a great trading day.

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

rickjshandicappingpicks.com/investing

Skype: riccja

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