NFLX is a good lesson on mean reversion trading in the Stock Market. The lesson continues today:)

Most are wondering when this stock market is going to stop:) The concept of trade the tape is teaching traders at this point how important that is.
The tax cuts, impending trade resolutions, pressure by the White House on the Fed not to raise rates, record low unemployment, record business profits, wage growth, and last but not least the implosion of the special counsel investigation are all positives for this stock market.
There are still potential negative floating around, the biggest as I see it is if the Trump Presidency is ended prematurely. Even the threat of that happening will implode this stock market. So that is something to watch very closely.
Now, perhaps you might think the Trump Presidency should be ended. That is fine, but you still need to be aware of what is going on if your an investor. That goes for Trump supporters also. You cannot put a blinder over your eyes and expect to make money in a news driven market. The key is to separate your politics from your trading. It is essential for your long run profitability.
So, as we sit an hour before the open, the stock market is again gaping up around 1/5%.
Of note, TLT is off .4%. Oil, metals, financials are all positive. To me, this is a very positive pre-market bias. I would not be surprised to see a trend day to the upside today.
If you read my remarks yesterday on NFLX and got into a mean reversion trade you were rewarded with an almost 5% gain for the day! In addition, you are looking at a 1.2% gap up this morning:)
A reasonable plan this morning would be to monitor the stock market and see if we get a trend day to the upside. If we do then you will want to ride out the long side of NFLX until the Trend day reverses, or its 30 min before the close.
When the 30 min before the close time frame hits, you then want to find a good stop, and if it is not hit, get out just prior to the close.
The idea here is that the mean reversion has now played out and you wish to exit. But you wish to maximize your profits while doing that. The above strategy allows you that opportunity.
Once you get the hang of these you will be looking forward to the next mean reversion trade! But remember, most mean reversion trades are underwater before they turn into profits. In addition, your going to take a big loss once in a while. Keep that in mind.
NFLX was one of those trades where you were rewarded immediately. These do not come around often enough:)

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’s Handicapping Picks

Skype: Ricca

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 has now entered the 3rd month of the season!  Results posted.

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 the service. Its free until NCAA FB starts. 

Positive EV Handicapping

Do you know the important clues that help determine which side has +EV?
  • Learn about Reverse Line Moves and how they apply to each sport
  • Learn about being a contrarian and using public % numbers to get an edge
  • Learn about the seasons within a season that all sports have
  • Learn key numbers in all sports

Sign up to get updates that will help you with your sports handicapping!