Positive jobs report but a large gap lower this morning! What does this mean? My thoughts

The Stock Market is gaping down again this morning with the Nasdaq leading the way at -.5%.
Of note, TLT is negative, as is most everything else but financials. That’s an interesting configuration, and I would suggest a neutral bias in the premarket.
The Jobs report came out at 5:30 and it beat expectations in almost every category. Wage growth was the outstanding number.
But despite the positive report, the stock market is heading down going into the open. So, good news, and a negative reaction:)
We know what that means! Most likely more downside to come.
As I have started this the financials have now turned mixed. If they go negative that would suggest a negative premarket bias. I would forget about playing any gap fills this morning:)
We are almost in mean reversion territory. However, if the white house goes through with slapping 200 billion in new tariffs on China I suspect we get a sharp move lower initially.
Word is that today is the day the White House will decide. If that happens and we do get a sharp move lower I will most likely add my first 1/4 position mean reversion trade today. But I am keeping an open mind on this.
Seasonally this is the weakest period. Combine that with everything else I have been discussing over the last several weeks, means I will not be in a hurry this time to start my mean reversion trades.
On the news front, the confirmation hearings are turning into a clown show. One could make a solid argument that unless we get term limits to just shut congress down altogether.
Now I know that is not viable, but, the abuses in Congress are so great that something needs to be done. The problem is that the only way your going to get term limits is by getting the votes of the Congressmen that are benefiting from not having term limits.
Quite a catch-22. The only other viable option is to finally get an independent DOJ, hiring people from outside of DC. Or perhaps having the DOJ outside of D.C. And then holding our esteemed representatives responsible for their actions regardless of what party they belong to.
But that makes too much sense, so I doubt it will ever happen. After all, again, Congress would have a say in it:)
This all means that the U.S. is going to get more of the same dysfunction we have been seeing. And at the rate, the rhetoric is increasing dysfunction is most likely the best the U.S. can hope for.
I have always said the U.S. people have had it way too easy. They have not experienced what other countries have experienced over the centuries. Perhaps it is the U.S. turn to get a taste of reality.
If so, it will be interesting to see how the American people will handle it. Because for certain they are ill prepared for it.
I got a bit off the subject this morning, but, in the end, it all comes back to investing and the environment you are investing in.
As most that have been reading this for a while now, I have a pretty pessimistic worldview at the moment. I read a great book many years ago that stuck with me to this day. ” Metamagical Themas” By Douglas Hofstadter(1985).
One quote from the boot was ” Humans creativity at the individual level vs Humans flirtation with self-extinction at the group level.
A great book, if you have the time to wade through it:)
We have another unknown yet this morning, the Canada trade talks. I suspect we get a deal and that it has little effect right now on the markets. It appears this market is heading lower regardless.
It would take a China trade deal to reverse things right now, and the odds of that at the moment are slim.
If I jump into some mean reversion trades I will post on my private twitter feed.

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

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