Market gaping down 2 days in a row??? What gives???

5:45 Update

A late game tonight in College Hoops:

#4 Duke

#1 Oregon

Betting is 59% on Oregon with the line moving from -2+100 to -3-116. It’s -3.5 at many books. Variables slightly favor Duke. Models are neutral. Public betting does not provide any clues. About the only thing, I can say is if you like Oregon its a bit later to jump on them. In a game like this if the line opened at -2even your late to the party laying 3 and 3.5. And at 3 you have to lay more than -110. I am passing but it will be a great game to watch!

 

As I write this the market is gapping down .65% on the ES. Not much in the way of news except the Fed now is in rate hike mode at least for the next few days. The world is still shaken by Brussels and what is yet to come. And then we have the Elections in November which is not providing any type of solace to Americans. And yet the market just keeps going higher?

That is the beauty of the stock market. When all seems the worst the market goes the other way. Sort of like looking at the NFL lineup for the weekend and you see Carolina at home against Cleveland and the line is -2!  Now the question of the day is…knowing nothing else except the strength of the two teams (Carolina best in the league, Cleveland worst in a league) which side do you take?

If you have been following me for any length of time and you choose Carolina -2 I am very disappointed. What you do is fight off every urge you have to bet the farm on Carolina. Then fight every urge you have to not bet Cleveland. And bet Cleveland. Its the old adage in the NFL that you look for the game that has no possible way of losing and bet the other way:)

Now, what does this have to do with the stock market? The reasoning is the same. Sentiment drives the market in several ways. First, if 80% are negative and short and we get a positive reaction to the negative news (think of reverse line move) take heed. Also, take heed when a large % are one way. If the market reverses these people will be jumping ship which will in addition fuel a sharp move in and of itself.

That is why you cannot evaluate the markets based on fundamental news. At least for short term trading. Long term portfolios is a different breed but even they are coming into question about being the best for obtaining gains.

So like in sports betting you had best have objective variables to go by to decide what to do short term.

My guess is today that the dip gets bought. No trading on Friday but I view this dip as a trading opportunity to the long side short term. I placed a few trades yesterday long TLT and SNDK while still being net short Oil. I am looking for more longs and possibly if the dip gets out of hand to the downside it might be time for a mean reversion trade long.

You can follow all my trades by following @rickjswings. It’s my private twitter feed for stock and options trades. It’s free for now and most likely for awhile. So take advantage of it and take a look . In addition, all my trades can be viewed in the spreadsheet link on this site.

Good Luck Today Trading

RickJ

RickJ’s Handicapping Picks

Leave a Comment

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Contact Us

We're not around right now. But you can send us an email and we'll get back to you, asap.

Not readable? Change text. captcha txt
Rickj's Handicapping Picks
Sign up now for our  newsletter. Includes handicapping tips

MLB in full Swing while 2 day Stock Put sales  are making new equity highs weekly!!!

RickJ's Handicapping Picks  The latest in positive EV handicapping Techniques

Overnight Plays in MLB are sent out around 3 to 4 PM PST the day before

Come join us for a fun and profitable Pro Sports season!!!
 
Sign up now for our newsletter with handicapping tips 
Close