What affect will “Release the Memo” have on the stock market this week!

The stock market is gaping down for a change this morning. Combine that with TLT being off almost 1% and you have a recipe for a nice drop this morning in the indexes.

Also of note, financials positive, Metals off about .5%, U.S. dollar slightly positive.

Overall a negative bias to me with the possibility of a bigger dip once the market opens.

Financials being positive however is a big help but TLT off 1% is worrisome.

I will be watching financials if they break lower look out below!

There is a lot going on this week on the political front. Things are reaching a fever pitch in D.C. Its a battle between the “release the memo” group and the Dems and never Trumpers.

I expect the memo will be released today before the state of the union. This will create chaos in D.C. There are a lot of people that have invested quite a bit of money and risk in seeing that the President goes down.

The validity of all of this I will leave to the pundits. However, regardless of which side, if any, is correct, chaos will start rising geometrically early this week.

If the “release the memo” crowd ends up being correct in their position, the potential is a massive criminal prosecution of all involved. If the other side is correct, it will most likely bring down the Presidency. The stakes could not be any higher for both sides.

I do not see how the market bull remains intact if things go as I expect them to go. At least in the short run. Long run it all depends on how things wash out.

I see no room for compromise on this. In the President’s favor, he operates best in chaos. While others are making mistakes and panicking typically he is strategically planning with clear thinking. On the other sides favor, they have the media on their side. At least the mainstream media. Even Fox news has lately been negative to this President. In addition, they have many still in the intelligence community on their side. And of course the Republican never Trumpers.

This is a battle that begun the second Trump won the presidency and it is quickly reaching a point of resolution.

I have my views on the entire mess, but, they are not for this site. I will merely say the chaos will not be good for the markets in my opinion.

Now, before you run out and sell everything en masse, I have been predicting a sharp drop as a result of our political environment for some time. And the market has gone straight up.

But if the market perceives a serious threat to the president, the market will take a plunge the likes of which you have not seen. After all, tax cuts, reduction of regulations, Business coming back to the U.S. will all be a big question mark.

So we will see:)  Should be a very interesting time. Try to stay out of the fray, keep an open mind, so you can think clearly while trading.

I had suggested I might take a mean reversion trade in XLU on Friday. But the gap up along with the gap and go left me on the sidelines. However, It is not a bad thing to watch XLU do a retest of the lows. At that point, the setup will be much stronger, especially if we get an RSI divergence.

I will be watching XLU very closely the next two weeks.

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

RickJ’s Handicapping Picks

rickjshandicappingpicks.com/investing

Skype: riccja

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