Things turned out well last week thanks to the Fed. It is funny how these patterns play themselves out to give swing traders the opportunity to make a profit.
This week we have a lot of Fed Speak and I am very confident we will be hearing about rate hikes in December from most of them. However, I doubt the odds of a rate hike in Dec are much higher than 50/50.
In addition, I doubt that the easy money is going to change regardless of who wins the election. Both Clinton and Trump will not be a factor in raising rates. Neither has the desire to put the U.S. in bankruptcy which will happen if short-term rates start moving to the upside.
This morning the market is gapping down about .4% which is a bit different from last week where 4 of the 5 days had gaps to the upside. We are overbought with no short-term edge. However, medium term the bias is clearly to the upside. We are approaching the end of September and typically October is time to start looking to add a portfolio to hold until May.
Last year and many years before that I had followed that pattern. However last year we had the historic drop and historic recovery which cost me on what is typically a reasonably high % trade. So I am not sure how I will approach this technique this year. Still working on it.
The short term swing trading, however, has been doing very well. What I may do however is shift gears sometime in October to my norm of more medium term swing trading with the idea of selling 1/2 at a price target and keeping the other 1/2 as a runner. Typically this is the way to go however during the offseason for the markets the approach of a pure swing with no runner works out best for me.
There are other ways to approach this and most likely one of the best is to keep a runner when the market is over its 10 day MA on a daily or 240-hour time frame. If the market is below the 10 day MA then abandon the runner strategy.
This is something I need to backtest and see what EV there is between the two. However, the most important variable in all of this is the stock selection along with the setup to use.
I have one swing trade going right now to the long side. Today I will be taking BreakOuts that trigger but without the runner strategy.
On the Geopolitical front things are heating up a bit in Syria. It has the potential to push the West and Russia close to a serious confrontation.
In addition we have the debates tonight. If you’re worried about how your candidate will do then you are missing a great opportunity of enjoying the Debate itself. It’s pure entertainment at its highest level. Do not let the poisonous atmosphere created by both sides to suck you into their world.
This is something unique to America and should be looked at as not only entertainment but also to get a chance to observe the Candidates under extreme pressure.
And of course, you always have the chance of getting a good laugh. I remember when Ross Perrot was answering a question ad he started out by saying “I am all ears” not considering that he had a unique set of ears of any candidate!!! Or when Gore did the famous stare down of Bush!
If you get caught in the nightmare that both parties are prone to create you will not enjoy tonight nearly as well as you should.
I doubt also that the Debate will have much of an effect on the markets.
Not much else on the horizon but the ideal scenario for me is a pullback into October creating a severely oversold condition which would be a great buying opportunity into the seasonally strong period. More than likely it will be a pullback and a mild one.
If you want to follow some of my trades along with my thoughts typically given after the open you can go to @rickjswings. 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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