One more day until the transition of government in the U.S. The two Presidents could not be any more different in their approach to governing and the world.
The outgoing president is a liberal progressive while the incoming president ran as a republican but historically has been in the middle.
Logically you would think that the transition would be smooth as the incoming president has many ideas similar to moderate democrats. But human nature what it is, hysteria has reached proportions never seen before in the U.S.
So what we have now is both parties on a collision course that will in all likelihood take them far beyond what most intended. Combine that with the hysteria triggering fringe elements in the U.S. and you have a recipe for tragic consequences.
The first test will start tonight and go through the weekend. The degree to which peaceful protests turn violent will set the stage for what to expect in the near term.
I do not want to get into politics and the pros and cons of everyone’s position. Merely to evaluate what affect the circumstances might have on the markets.
With that backdrop, if things go smoothly leading up to the inauguration I would expect a rally Friday. If things turn violent the drop we see will in all probability be proportional to the degree of mayhem you see.
As far as my opinion as to what to expect, I would think the odds of things turning very violent are over 50%. Protesters are getting paid to stir up trouble. In addition, the politicians are doing virtually nothing to calm people down. To the contrary, the Democrats and the media keep stirring the pot.
So as I see it the U.S. will have dodged a bullet if everything is peaceful this weekend. A big one.
If your heavy in the markets long term you do not have to worry much about these short term events. However, if you’re a swing trader then you need to be watching with your stops in place.
The swearing in ceremony begins at noon est. Most likely many of the groups protesting will be in place tonight.
I do not plan on putting on any swing trades today. I will be watching in the morning to see how tonight plays out. Then if things look like they will be peaceful I will be back to normal on swing trading.
Premarket everything is flat with nothing giving any clues as to how the day will pan out.
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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