How low can the markets go on the N. Korea news? Is there any other news in the wings threatening this market?

Markets are gapping down this morning with QQQ and IWM leading the way at almost 1%.

Of note, TLT, Oil, and Metals up strong, Financials getting hammered as is Biotech.

I am starting to like this pullback and might start positioning some trades on this pullback. I want to see if we are any threat for a trend day down before I make any trades this morning.

The premarket is very bearish so early trades need to be very cautious.

The market was heading along great yesterday and then N.Korea started getting in the news. The rhetoric keeps heating up.  In addition, the U.S. is sending more troops into the area. Whether this is a buildup for a strike or cautionary its hard to tell at this point.

So, when this news hit the market tanked. Not so bad but enough to close solidly down for the day. And this morning we have follow through on the downside. Absent any new news I do not see this pullback going very far right now.

But if we get more bad news today, all bets are off. Today could get very ugly with any more bad news.

On the political odds front, the Alabama special election took an interesting turn.  I had said about a month ago to bet against Strange, the establishment Republican running in the primary to take Sessions seat. You would have gotten 6 to 5 betting against Strange. Then within a few weeks, Strange became a 6 to 5 dog.

But, Trump, yesterday came out and endorsed Strange the establishment Candidate. So, the odds now have turned back to 6 to 5 in favor of Strange.

You can draw a few inferences from these events. First, the line only moved to 6 to 5 in favor of Strange after Trump’s endorsement. You would think that it would now be 2 to 1 or higher. But the Trumpian candidate that openly supports MAGNA and Trump is hanging in there. Which, reinforces my belief that the nonestablishment republicans are the ones that are going to get the gains in 2016.

Why Trump endorsed Strange is another interesting question. One that I do not have the answer to. Although Trump might be of the opinion that helping the establishment at this point will help his agenda get through the Senate. My thought is, not a chance. There is nothing Trump can do ever to win the support of the establishment Republicans. At least that is how I view it.

Now does that mean betting aginst Strange is no longer a good wager? I think there is still quite a bit of value taking 6 to 5. But not as much as before Trump’s endorsement.

We will not have long to wait as the special election is only days away. This will be an indicator of how my theory is going to work out. One never knows exactly about politics.

So, my plan today is to look at the internals the first 15 min or so and determine the chances of a trend day down today. That will determine if I trade this morning.

AGN, IBB and IWM are on my radar for trades this morning.

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

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