The Stock Market is gaping down over 1/2% this morning. What are the factors involved?

After a long weekend, the stock market is gaping down over 1/2 %.

Of note, TLT up over 1%, U.S. Dollar + 3/4 % and metals mixed.

Most everything else is in the red with Financials leading the way to the downside.

This to me is a very bearish configuration premarket. Unless things change the next 2 hours I suspect we have more downside today.

Most likely the primary factor affecting the stock market this morning trades. It seems that the geopolitical environment is not as conducive to negotiating trade deals as the Trump team thought.

Lots of bumps in the road. Not helping is the E.U. fighting the U.S. decision to pull out of the Iran deal. I do not see the E.U. caving easily on this one. Although, companies most likely will cave to U.S. pressure as they cannot afford to be removed from the U.S. Market.

But, the fact remains that the E.U. is going to fight and scream on this one.

Add that smaller members of the E.U. are not as on board with the bigger members and it is creating some turmoil in the E.U.

Then we add to the mix N. Korea which it looks like the summit is on again. The only mystery to me is how Trump’s opponents would rather see him fail on N. Korea than succeed.

Considering the implications of a denuclearized N. Korea I do not see how anyone could not be rooting for the Trump team on this one.

Its a testament of how dysfunctional our political system has become. A 3rd person looking down on the earth and seeing what is going on would be in dismay at how humans are in the process of ruining something very special.

Afterall, oxygen, food, water are all plentiful on the planet earth. So, why the necessity for humans to complicate things with there petty drama?

Religion, power, corruption, and greed are taking apart the world methodically.

I could go on and on about this, but needless to say, the stock market has its work cut out for it as it seems the perfect storm is upon us.

Last but certainly not least is the OIG report due out this week. Finally, this long-feared report is going to be published.

Horowitz has already taken his toll with quite a few FBI upper levels and DOJ upper levels resigning or fired.

I suspect after the OIG report there will be a number of indictments coming down by way of Session and Huber.

We are reaching the endgame now of what has been a hysterical endeavor to take out a sitting president. Its been going on now for almost 2 years.

As I have said before lines have been crossed. There is not much room for compromise on this one. Either Trump goes down or people head to prison, it’s as simple as that. , With that in mind, its a do whatever it takes attitude right now.

All this means more volatility in the stock market. The market rises and falls on the perception of the threats to Trump. Everytime news hits that seems very negative to Trump the market quickly is off 300 to 500 points.

Then we discover, sometimes on the same day that the news is fake and the market recovers.

Think about this for a second. Is this the trading environment you want to step out and risk any significant money in?

Time to be very conservative in the markets. At least until we figure out where the political winds will blow next.

I am long a portfolio of mostly individual bonds and some equities that have a good dividend. My swing trading has been at a minimum for me.

Saying that if we get a trend day down today I will be looking at some mean reversion trades prior to the close.

Good Luck Trading today

RickJ’s Handicapping Picks
Skype: riccja

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