The Stock Market is disappointing a lot of investors at the moment. But remember we are not even 10% off the highs. In the scheme of things, this is nothing.
The positive is we are entering the best six months of the year. In addition, from mid-November through the first few weeks in January, historically have been the strongest.
That is a big positive. Do not let the negative news make you forget that.
The negatives are long, however. And they will show up, but I doubt they will overcome the tailwind for the next six to seven weeks.
1. The Fed is in delusional mode. If they think raising rates in the face of political unrest at home, rising tensions across the world, tariff fights still going on, caravans coming to the southern border, then they are in the wrong line of work.
Unfortunately by the time they figure it out, if they ever do, it will be a tough landing for the U.S., who has held up very well against the economies of the world.
In my opinion, its time for a rate cut, and some bond buying again as a protection against increasing risks. It does not have to be anything dramatic, but enough to give confidence to the markets that the Fed is there to protect the U.S. economy if needed. Right now, the mood is very anti-fed.
2. The U.S. once the model of democracy in the world, has become the laughing stock of the world. The antics of our politicians have done more for the propaganda of our enemies than they could have done on their own.
The faith in the election system is at an all-time low by both sides. The election system infrastructure is antiquated with no desire to correct it. The only thing the politicians want is a system that they can easily manipulate to get an edge. And that is what you are seeing occur right now.
So, without transparent free and fair elections, what do you have? The answer is obvious, you have what you are seeing now across the U.S. With Broward County the extreme example.
Both parties are at fault. Both want to protect the status quo at all costs. After all, if the people actually decided things, the special interests both foreign and abroad would be left out in the cold.
I am an independent, and if I had to pick a party it would be libertarian at the moment. If the political system in place in the U.S. does not change quickly it will self-destruct. Which is what we are seeing now.
The markets are also seeing this.
3. Polarization in the U.S. has become so extreme that there are groups of people that are so entrenched that they most likely will never return to reality.
You see it on the social media. And you see it on both sides. The only defense they have is that the U.S. media has now become the worst media of any country in the world. There are exceptions of course, but they are few and far between.
I challenge anyone to give me the name of a country that overall has a worse media than the U.S.
This, of course, exacerbates the problems, since the gas lighting and brainwashing go on 24/7.
That is why you are seeing the uptick in domestic violence, 24/7 non-stop media gaslighting and brainwashing. Pushed along of course by politics and other special interests.
Most of the polarization are people that have become useful idiots to the few that are pulling the strings. If you were an outsider looking in it would be fascinating to observe. The human race has not learned a thing over the years. Its the same continuous patterns being played out time and time again.
For the markets, for now, this is built into them. But at some point something will snap unless some things change in the U.S. A country overloaded in Debt, that has a political system that cannot function, and is hell-bent on destroying the other side rather than working together for the good of the country, is not a country that has is in its infancy. Its a country in the last stages of its existence or transformation as a former president called it.
4. Internationally, things are not as bad as the media would have you believe. I could give example after example but suffice it to say, that is the least of America’s problems right now.
So what do you do as a long-term investor? The only way to deal with this is asset allocation. If you have a nest egg and do not know about asset allocation, I suggest you read up on it. Because it is critical to keeping your investments safe.
If your a shorter term investor than the above does not concern you so much from an investing standpoint. You just need to recognize when the investing environment shifts.
Saying all of this, I suspect many people felt the same way in the 60s. But, the U.S. at this point in time to me seems to be a bit different then what I saw in the 60s. Of course, I was in the “make love not war” generation in college at the time, but I was still interested then in the markets and politics.
The key is as in everything else if you can keep your head when everyone else around you is losing theirs, you will have an advantage.
That should be your goal. Do not get caught up in any particular ideology of hate and division. I have been there, and it’s exciting and fun at times. But in the end, its a waste of energy and has no productive value.
So how do you know if you are caught up in this craziness? Well, one test would be, if you really think Trump is like Hitler, then you have gone off the deep end. I am not an avid Trump supporter and am critical at times of some of the things he says.
But, more on policy and communication.
But I will also say overall, I would vote for him in 2020.
But, that’s a big step from the “Trump is Hitler stage”:) I can say with 100% certainty if you really believe that, you have lost all sense of reason. You have let the 24/7 pounding the media gives you, gaslight and brainwash you.
If you are in that category, whatever you do, do not take up trading. Regain your perspective, if you can.
Now, enough of my perspective, (for what it is worth) and back to trading.
I made 2 trades yesterday. I started a position in SPY via SSO at 111.11 and is now trading at 111.95. In addition, I started a position in MOS at 36.62 and premarket is now at 35.75.
With the Index looking to gap up about 1/2 %, it will not give me an opportunity to add to my SSO position. I may look for another swing this morning. But will wait to see how the first 15 min or so shapes up today.
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