It looks like another solid plunge on the open this morning.
The indexes are all off over 1% with the Nasdaq leading the way getting close to the -2% mark.
Financials are off over 1.5%, While TLT and the U.S. Dollar is positive.
That is a pretty negative bias (to say the least) this morning. I really do not see any bright spots in any of this, except perhaps TLT not being a little stronger.
After a tough October, the markets are sliding again just prior to Thanksgiving. The test will be how they do Wedn and Friday. If we do not get a rebound those two days, that will be a very bad signal.
Imagine in a dream world where the U.S. politicians would be working together to build on what the Trump administration has started with unemployment, GDP, Trade and border security.
Where they all had no special interests they were beholden to and could make their decisions solely on what is good for the U.S.
Where foreign influence was absent in the legislative bodies, and decisions could be made solely on the merits.
Where billionaires, did not an easy route to influence elections by being able to make almost unlimited funds available to make the changes that their ideological view of the world is.
Where the press was actually the free press again and had no bias toward any party or ideology. But merely reported, with triple checking of the facts before reporting on them.
Well, one could argue the U.S. has never been to that eutopia:) But, I assure you, we are closer to what George Orwell envisioned when he wrote his book “1984”)
He was just 20 to 30 years ahead of himself in his prediction.
So when you scratch your head and wonder what is happening to the markets, all you need know is that all of these influences are catching up with reality.
And to top it off, the Fed is no longer there to rescue anyone at this point. They are merely adding fuel to the fire when liquidity is sorely needed right now.
Much more of this, and you will see a recession in the U.S. you never would have thought possible. It will make the housing drop look like kindergarten if things are not reversed.
That is my “Scrooge” analysis as we head into the Holidays. Is it accurate? Only time will tell. But, even if I am in the ballpark the U.S. is in for a rude awakening in short order.
You cannot have any law and order, 24/7 subversion of the government, and no press to protect the U.S. without consequences.
The market is expressing just the beginning of these at the moment.
So what does one do?
My approach is to always allow for the possibility you are wrong. I almost always factor that into the equation. The human mind can only process so much, and there is a lot going on right now, both that you can see and much you cannot see.
So my approach is to try to have objective benchmarks to trade rather than my overall view of things.
One I shared with you a few days ago. The Nas/SP relative strength chart on a weekly basis. That has only widened and we are weeks away from a long trigger if not months at this point.
Watch financials, Watch the Fed, and trade what you see not what you hope things are. Trade the tape.
That means be conservative at the moment even though we are heading into a very strong period historically.
I exited my Qcom trade yesterday for a nice profit. I am still in my 1/4 position in SPY, and if the day closes weak will add another 1/4 unit. These are mean reversion trades.
I went through this in 2008 and it was much worse. Although, If we do not see a rally into year end, it has the makings of another 2008.
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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