Did McConnell and Trump really bury the Hatchet? What affect will this have on the markets?

Did McConnell and Trump really bury the Hatchet? What affect will this have on the markets?

The markets are gapping up 1/4% 20 min before the open.

Of note, Financial strong, oil and metals week as is TLT.

Looks to me like a strong bias heading into the open.

The market has now come from oversold to neutral in the short term. That means mean reversion trades are off the table for most of the securities.

I am still watching several sectors for a signal to get in that are bottoming. The U.S. dollar is one of them. Right now though nothing has triggered there. Natural gas is another.

Things have improved a bit on the U.S. political front. Seems like Republican leaders in Congress are getting the message that their 15% approval rating is well deserved. Arizona was a wake-up call for them and so far they are taking notice.

That means Trump’s platform is back on the table for now. We will see what happens when they get back into session. I cannot imagine that they will give in that easily. But, with 2018 coming up, that is quite an incentive.

Meanwhile, the Dems are now talking about shutting down the government unless the wall is off the table. In addition, they have a demand for blank amnesty for Dreamers.

I expect that the government will come very close to shutting down this time if not shut down. The Dems backs are against the wall and they have nowhere to go right now. So far the Resistance has worked against them as have the Russia story.

All they have left is the most extreme measures and honestly, I do not see how this will help them at the ballot box. I stick with my theory that the gains in 2018 will not be for the Dems but the non-establishment republicans. If McConnel was on the ballot in 2018 I would be betting against him.

So, that means you should expect a lot of volatility when Congress gets back in Session. If it does not come from the Never Trumpers sabotaging the agenda it will most certainly come from the Dems or even Trump as to a government shutdown.

Taking advantage of it will be the tricky part. One way is to lighten up when Congress gets back. And another will be to be aware of the dates on shutdown. Ideally, you want to see a severe market scare heading into the debt ceiling vote and then put your trades in a day before the vote.

What could go wrong? A shutdown of course. No easy money trading the markets:)

I will post any trades I make this morning. Political odds will be updated when I post my handicapping comments later 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


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