The markets are gaping down yet again this morning. SPY -1.30% QQQ -1.40% DIA -1.17% @CL -2.82% GLD -.66% TLT +1.07% and the only bright spot if you can call it that $VIX.X +1.35%
The reason I say a bright spot because it is hovering around break even. Every day this week it has been up over 10%.
I was an active trader during the financial meltdown 10 years ago. Matter of fact I was vacationing in Hawaii when the news hit that the U.S. debt had been downgraded. This was announced after the market closed on Friday:)
I had some sizable long positions at the time, and I had thought that on Monday the markets would open down around 2000 pts. The sentiment was in the tank (like it is now). So I had to wait out the weekend for the open on Monday. As it turns out the market opened down between 300 and 500. I immediately sold everything within 30 min. and waited it out.
I was not as nimble this time around, but I did jettison a few mean reversion trades yesterday and am down to a dozen small positions of swings, that I am selling calls against. I have my main portfolio of interest-bearing bonds and ETFs. Which are doing fine.
In situations like this, no one can tell you with any certainty what the market is going to do. (they never can):) But, it’s always a good idea to be on the conservative side of things until the doom and gloom starts leveling off. The oversold indicators that work 95% of the time are worthless in an environment like this. It will get you in trouble.
The idea is to get up early. Have your game plan in place, and do not join the crowd and panic.
What is making this much worse than what it is, is the 24/7 media hysteria. One thing we have learned over the last 3 years is the media lies. They cannot be believed. We also learned that politicians lie. And we learned that intelligence agencies lie. If that has not sunk in by now, quit trading.
Even some of the most level-headed people I follow are succumbing to the herd mentality. I suspect it will get much worse because elections are approaching. The politicians and the media finally think they have found something they can use to bring Trump down. They will not let this opportunity go to waste.
Now that means one of two things. They know this is not as serious as they are portraying it. After all, if it was, they would be busy protecting themselves and their families. Or they are sick bastards, that could care less about the collateral damage they are causing by their hysteria.
I tend to believe both are accurate:)
Some places to get a reasonable idea of what we are dealing with:
Again, do not listen to the media or politicians. What they are selling is less than worthless. They have a vested interest in creating hysteria.
Some things to keep in mind. You do not have to trade today. Watch, and if you follow me and I see an opportunity I will send it out via Viber. This is something I do for free to subscribers to my handicapping service. Or you can read some people I have mentioned before for some reasonable information. But I warn you, there are few reasoned voices out there right now.
Let’s take a quick look at the political odds this morning:
The Dem nomination odds are stacking up as follows:
Sanders 54/46 -2 Pts
Bloomberg 11/89 -9 Pts
Biden 29/71 +17 Pts
Buttigieg 4/96 -6
Warren 4/96 -2
Clinton 6/94 +2
Klobuchar 1/99 -2
Steyer 1/99 Unchanged
I have several wagers going. I wagered against Sanders and placed a wager on Bloomberg and Clinton. I skipped Biden. this is the most likely wagering to end up with a positive EV. It all hinges on the DNC screwing Sanders. To me, I view that as a certainty.
The Presidential winner odds are:
Trump 53/47 -2 Pts
Sanders 30/70 -1 Pt
Bloomberg 6/94 -6 Pts
Biden 15/85 +9 Pts
Buttigieg 2/88 -3 Pts
Warren 1/99 -2 Pts
Trump is staying a bit over 50 % while Biden is on the rise.
Control of the Presidency:
Control of the House after 2020
62/38 in favor of the Dems. This has come down from 5 to 2. The value is pretty much gone on this wager, yet, I plan on wagering against the “dirty 30” across the board. They will all be incumbents, so most likely the odds will be even money to getting plus odds. I cannot see ending up behind when the smoke clears. At the worst half will lose. And at the best close to a clean sweep.
This is the best value of all heading into 2020.
Control of the Senate after 2020
73/27 in favor of the Republicans. This seems about right. I do not like either side of this wager.
Another wager I will be looking at is whether Graham wins the SC primary. The price will be sky-high, and SC is less than happy with him. I will likely have a small wager that Graham gets knocked off in the Republican primary.
Collins has no primary opponent and Maine is a tough state to handicap. So there is no wager there.
I would like to see a line come out on whether Romney finishes his term. Utah is on the warpath, and I could foresee something happening on that one. But until a line comes out it makes for interesting speculation.
That about covers it:) I am open to questions via email or skype.
You can follow the political odds at predictit.org
RickJ’s Handicapping Picks