Up Up and Away for the Stock Market! What are the risks going forward?

Up up and away. I am getting dizzy watching this stock market go straight up.

It appears the power of deregulation and lower taxes for business is going to finish off the bears for a while.

I doubt there are many mean reversion short traders out there anymore. Most have either given up the ship or have run out of money.

This can also occur for bulls in a bear market. That is why a 50, 100 or 200 day MA is a good filter for these trades.

It will not eliminate risk completely but it will help, a lot!

The only risk now to the markets are Congress and the special counsel.

Congress remains dysfunctional and I doubt that will change anytime soon. Midterm elections are coming up this year and things will just get crazier. The people will have to wait for their representatives to put them to the top of the line.

Brinkmanship at the expense of their constituents.

Then we come to the special counsel. Nes was yesterday they wanted to talk with the president. Not about collusion, which has been forgotten, but potentially obstruction of justice in the way he treated Comey, Sessions and whoever else he has interacted with.

If the special counsel finds that Trump violated the law then this bull market is over. The 300+pt drop that we saw a month ago on fake news that Trump had improper communications, will be nothing compared to the free fall we will witness.

How do you protect yourself?  I would watch for clues in the options markets. Unusual activity on the short side, buying puts of unusual size might be a tip-off.

There is not a doubt in my mind that there will be some people that know what is coming and will attempt to profit from it. Free money so to speak. If they get too greedy there will be clues in the options market.

In addition, considering Congress has exempted themselves from insider trading rules, our esteemed lawmakers will be at the top of the list getting ready for the plunge.

Perhaps I am just too cynical:)  We will see.

This is going to be coming to a head soon. We have the Nunez memo, And FBI whistleblower also that has come forward to tell of secret meetings to plot against the president, another FBI whistleblower that is ready to blow the lid off of Uranium 1 and of course the IG report that rumor has it will expose the misdeeds of the DOJ and FBI pre Trump.

So I view it as the race is on with the stakes as high as they could be for the participants. The presidency is at risk while prison time is also at risk for some if true.

Now, I in no way wish to infer who is on the right side of all of this. None of us can know as the information is not something that is shared with the public. There will always be a hint of some of the facts. But without full knowledge, it’s a useless endeavor to speculate.

But as a trader it’s important to know what is on the horizon that might affect the markets.

Finally, the geopolitical front is heating up. I think we are seeing the beginning of a period when this will also be at the forefront of event risk.

The CIA has made it a point of telling all that N. Korea is only a few months away from having a missile capable of delivering a nuclear warhead to the U.S. Russia is again off our coast with subs. This time in N.Carolina. We have potential tariffs on China solar panels along with our military sailing close to disputed Islands in the China seas.

Then we have Iran and the Iran deal which will most likely be decertified in the next 6 months. And we have an EU that is for the most part, not a willing participant in supporting the U.S. as enthusiastically as they have in the past.

Last but not least we have Sytra heating up again, Turkey causing trouble and the issues between Israel and the Palestinians.

Quite a lot of its plate for the stock market. A minefield for the markets to make it through.

Before you go jump off a bridge, the markets are up again this morning. Another day another gap.

Of note, Financials, metals, strong. TLT and the dollar week. This looks like a positive premarket bias to me.

I am long one mean reversion trade in DUK. I will most likely exist today. The timing will depend on the breadth shortly after the open.

I have not been around for our 30 min twitter time lately. I have a lot going on right now the least of which is a multitude of positions to manage early in the trading day.


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: riccja

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