An important 2 weeks for the stock market. We have a rate hike possibly this week, the tax bill, and the potential for a DACA blowup in the political arena.
All expectations are for a 1/4 pt rate hike Wednesday. This is most likely expected, but I wonder if the rate hikes are going to put a damper on the stock market.
Remember the 2 steps and a stumble rule:)
Then there is the tax bill. Just over the weekend, Collins has indicated she may or not be on board depending on the final bill. So we have Corker an absolute no. If Collins goes then they are on the bubble.
I still think that the chances of a bill on the Presidents desk this year is grim. The market is expecting a bill, and this will be a major disappointment. The odds are now down to 2 to 1 in favor of a bill by year-end. I say take the 2 to 1.
The problem as I see it is that there is a lot of special interest money coming in to kill the bill. So you have the voters on one end of the spectrum for the Republican party vs the special interest money. Its an interesting dilemma for our politicians and many are going with the taxpayers on this.
However, with only 2 margin lead in the Senate, 3 defectors will kill the bill. When it comes down to the final vote, I suspect Corker, Flake, and Collins will be a no vote. McCain is a close call for reasons I have talked about last week.
I actually think they have the wrong favorite on this wager. I say 2 to 1 against a bill being passed in the Senate. The house will be no problem.
As far as DACA, there has been an extension of funding so they have kicked the can down the road on this one. But not that far, and I expect an amnesty bill will not be passed for quite awhile. The political spectrum is divided on this and there are elections coming up next year.
Right or wrong about DACA politicians basing their decisions on what is right has long gone past. It’s merely weighing how this will affect chances of reelection. That’s the #1 factor with special interest money the 2nd. So it’s going to be very tough getting DACA extended as I see it.
Although I see a compromise in the works. What it looks like I have no idea.
So the market has a lot of things to worry about heading into year-end. But this is historically the best time of the year for the markets seasonally. It should be interesting to see which wins out.
The markets are mixed 30 min before the open. Up very slightly. Of note, Metals slightly down, Ibb very strong this morning, The dollar is down, TLT is on the plus side,
Overall, a neutral premarket. I am long TUR in a bottom reversal trade. And so far it has been a picture perfect trade. On the other hand, I am long GLD as a system trade and that is underwater, with no exit signal yet. Then there is XNCR a mean reversal trade that should take off if the IBB rally is for real.
I am watching ILF for a bottom reversal trade this morning. I suspect I will take the trade the first 30 min of trading today.
So far the markets except for a few isolated days has ignored the minefields out there. We got a hint of what is going to happen if the special counsel actually goes after Trump. Down 350 in about 20 minutes is a good indication of what is in store if they go down that road.
Myself, take that times 10 and you will get a real picture of the market chaos that will occur. The tax bill not so much but still a potential problem.
What I would like to watch for if I had that capability is unusual put activity in the U.S. markets. When I say unusual I mean extremely abnormal put activity. That to me would be an indication there willl be political news very soon regarding the special counsel.
Cynic that I am I can assure you there will be interesting both here and abroad that will have prior knowledge to profit from the news. That is probably the only way you are going to be able to predict what will happen. But even that is not 100% but to me, it will provide some EV for a hedge or a short.
I should be around during the open. Come join me at @rickjswings
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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