The stock market is having tariff jitters again this morning gaping down 1/5th% an hour before the open.
Mexico looks like a done deal, Canada is actually making some progress, and the E.U. also looks like a deal might be done.
But China is not rolling over in the slightest. At this point, it appears a full-blown trade war with China is a breath away.
Now, things like this can turn on a dime but for now, it looks like we have some more downside to go in the stock market.
In addition, there are some signals that the stock market might have much further to go on the downside from here in the next 4 to 6 weeks.
You never know about these signals. It is sort of like handicapping sports. They have a positive EV edge but in the short run, there is a lot of volatility to these signals. But they are present and should be taken into considerations.
Especially when trading a mean reversion style! I have tightened up my requirements for mean reversion trades, at least until mid-October. Then we will see.
Of note, TLT is down about 1/3%, while Oil up a little over 1/5th %. Financials are down with the indexes.
To me, this looks like a Neutral premarket configuration. I would not be surprised to see some kind of attempt at a gap fill early. Watch the financials and TLT.
If this were anytime but the September trading period I might already have been long 1/4 position in SPY as a mean reversion trade.
But my experience warns me to be a bit conservative here. After all, the best months of the year are almost here, if that is possible this year:)
There is a lot going on in the Geopolitical front. Firs,t you have the U.S. cutting aid to the Palestinians. As if the mideast was not already a powderkeg, this should raise tensions a bit further.
Turkey is getting more and more alligned with Russia and China. How this goes is one of the most significan geopolitical events right now. For a NATO country to take this position is getting into uncharted territory.
Combine this with the strategic importance of Turkey for the U.S. and you can see things heading downhill fast.
Then you have Syria, which, for all intents and purposes is an accident waiting to happen. Iran and Russia are stepping up its military action there, while the U.S. France and the U.K. are mulling over there own attacks in Syria.
And for good new,s the N.Korea denuklarizion is back on track and a 2nd Trump Kim meeting is in the works. This is good on several fronts. Most everyone wants this to happen, except for the staunchist “Anti-Trumpers” and more importantly, it would not happen unless China gave the O.K.
I view it as a bellweather for U.S. China relations. As long as the N. Korea talks to not break down completely, U.S. China is merely a posturing between two countries. If N. Korea goes back to their old ways abandoning the talks and getting agressive, take heed.
On the insane U.S. political front, not much changes, except for the worst. Rhetoric keeps getting more and more violent. With some openly calling for the assination of the President. One only knows how long this can continue without widespread violence being triggered.
During Obama’s 8 years if that would of happened the person would of been arrested before the end of the day with charges brought. But now, it seems this is allowed discourse. And in some circle,s you get a badge of honor for expressing that opinion.
And then as if there is not enough going on in the U.S. midterms are only 2 months away. The expectations are that the Democrats will retake the House. And the more I look at the numbers I see that as a real possiblity.
That means, impeachment. Rest assured, the country will then have to suffer through a House impeachment process with the accompaning demonstrations, and non stop media.
If you were ever thinking about taking that several month sabatical to a foreign paradise to enjoy the ocean, that would be the time to do it:)
But, there is good news also. Economic confidence is at an all time high. Regulations on small business are still being discarded. More tax cuts seem to be on the way.
But will all things human, the better things are the more humans try to screw it up. And now is no exception.
And as dessert, we have Hurricane Florence about to hit the mainland. I assure you the articles have already been written that Trump is not doing enough for the States that get hit. It will not be but several days before you see these articles out, coordinated, by the media.
Very similar to Puerto Rico, but we find out just recently that the Mayor that was so vocal at the time, got sentenced to some years in prison for fraud.
So we have news that can move the market either way right now. Breakthrough in Tariff talks being the leading item.
For clues, watch the financials. Also, TLT, is a good inverse bellweather.
I was out most of the morning yesterday , but should be around for a few comments this morning. And perhaps a quick trade.
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
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