Well, the stock market is nervous, to say the least! The severity of yesterday’s drop even surprised me.
All I am expecting now is the Fed to make an announcement today that they are raising rates another 1/4% just for good measure today:)
The Fed is out of touch. The U.S. is falling apart faster then one can imagine right now.
I won’t go through everything again because they are too numerous to mention. But now add to that the social media scandal that has brutalized the stock price of FB. And it is just getting started. Also, add to it that the word is Sessions has a Grand Jury in place.
Then we also have the new items yesterday that McMaster is out and Bolton is in, Trump has new attorneys in the Russia probe, including Digenerio a former Special counsel himself and along with being a former federal prosecutor.
Then, of course, we have this monstrous spending bill that Schumer and Pelosi are bragging how they do better in the minority! Of course, rubbing it in the class act that they are:)
As the final insult, Congress gave themselves a bonus on the spending bill!
So is it any wonder as the U.S. spirals out of control that the stock market is tanking. And the problem is the show is just getting started. We have not seen the full-blown constitutional crisis that is quickly heading our way. When the IG report hits I suspect we will not be far away from that entertaining development.
Honestly, things were boring before Trump took office:) Now D.C. has been revealed in all its glory. The media has been revealed also. The intelligence communities under the previous administrations have also had their masks taken off. For those that are still of clear mind and have not succumbed to the 24/7 indoctrination of the mainstream media, you have had an entertaining time watching everything unfold.
For those that have succumbed, all I can say is you have my condolences. Its a tough task keeping a clear head when everyone around you has lost theirs. Remember, logic and clear thinking rule the day. That has always been the case and always will.
So where are we now in the markets. The million dollar question. What is one to do when it appears everything is falling apart?
My approach has always been to stick with the plan. I have lightened up substantially months ago on my core portfolio. Now I spend most of my time concentrating on swing trades and mean reversion trades recognizing the risks to be substantially higher.
I think its a mistake to be out of the market completely. There is too much uncertainty in all of this to not recognize that there are variables that you cannot know or understand completely. That is why you see the market rise on a wall of worry most of the time.
There is a lot to worry about here but on the other hand, there are positives also. The tax cuts and money flowing back into the U.S. has not changed. If Trump is successful with the Tariffs and gets reciprocal tariffs, that will be another big boon for U.S. business.
Looking at the markets this morning most indexes are off about 1/4% except the Nasdaq which is off 1/2%.
Oil and metals are strong this morning, TLT in step with the markets of about 1/2% and biotech is getting hammered off over 1%.
Note that the dow was off over 200 overnight and now has come back to off around 70.
I put on 2 mean reversion trades yesterday in the S@P and Nasdaq. Looks like I was early but they are both 1/4 positions.
I also have a mean reversion trade with CMCSA which held up fairly well yesterday and is off about 1/8% premarket.
So I am well positioned if we get a bounce. If not, then I will evaluate when I think its time to add another 1/4 position. We will see:)
They say the time to buy is when there is blood in the streets, well, I think we are seeing that now.
As a final thought, I would forget the idea that the Fed is going to come in and save the day. They are jettisoning their asset purchases with record speed and are on a tightening schedule. Compare this to Helicopter Ben and Greenspan who flooded the markets with liquidity on the Y2K scare and you can see the difference.
The risks now are monumental compared to Y2K and many of the other events where liquidity has helped.
Went a little longer than usual this morning but these are very interesting times:)
5:10 Update: Markets are now positive:) Amazing.
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
