As usual with the markets they did the unexpected yesterday and took a dip during one of the strongest periods of the year. I did not fare very well and got stopped out of several positions but still have a number of positions on and also added a 1/4 position in SPY at the close, a mean reversion trade.
I think what prompted the drop was Kerry’s speech regarding the U.N. resolution that the U.S. abstained from that has been in the news and I talked about a few days ago.
I do not want to get into the pros and cons of the speech itself but let me say that rather than calm the Mideast down it has the potential to increase terror not only in the Mideast but around the world. As now Kerry has set forth a path that is impossible to obtain and which now will be the demands of groups that have no intent on peace.
In addition one of the stabilizing forces in the Mideast has been the U.S. unwavering support of Israel. Whether you agree with it or not just the fact that the U.S. has Israel’s back created stability in the area. This speech by its content has damaged that vision and will in effect create an incredible amount of instability especially once the reality sets in that Kerry’s vision is unobtainable.
Now, this is something investors need to keep a watch one. There are talks headed by France on this issue starting in a day or so. As I see it no good can come of these talks and will further destabilize and area that is seeing chaos where ever you look. As an aside, you might ask why these talks do not include Russia’s annexation of Crimea?
In addition, the current administration has until Jan 20th to do more damage to the Mideast and while most think that was the Administrations parting shot I am skeptical that it will be. Another shot will tank the markets so look for it on the January 16th.
I am spending a lot of time on this issue because not only do I keep up on it closely because the dynamics of it is fascinating and have been going on for as long as history itself but also because I do not want to be invested to any great degree if this administration takes what they will perceive as a critical shot to Israel.
One side twist of all of this that is interesting is the one country that might stabilize the area and quash the deal is Russia. Imagine that. The dislike between Russia and the current administration is so great Russia might neutralize anything else that tries to go through by a veto.
However, and not accidently the current administration is now talking up sanctions against Russia which I assume are a negotiating position that if Russia goes along with what Obama has planned no sanctions will be put on Russia. Otherwise, I cannot imagine why Sanctions would be forthcoming on a “secret high-level official” leak of a “secret CIA” report before the official reports of all the agencies are finished.
Like I said Game of Thrones has nothing on what is going on behind the scenes now instigated by the current administration 3 weeks before exiting office. It’s unprecedented and has the potential to create another Libya.
Enough of my mindless chatter this morning:)
Today I will take another mean reversion trade if we get more weakness in the market. In addition, my longer term trades will be put on hold and back to day trading these setups for a short time. At least that is my plan!
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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