It had to happen. The law of gravity finally kicked into gear for the stock market.
I cannot remember a day like yesterday, where at 1 pt the Dow was off 1600!
The overnight numbers are solidly off their lows but that means nothing right now. would not get very optimistic until things get off the insanity level in D.C. And as things look right now that will not be for some time.
We are in uncharted territory right now in the U.S. The results of a presidential election are not only being unaccepted by the other party, but the other party is actively seeking to overturn the results, over 1 year into the presidency.
Make no mistake about it, this is not going to end well. There is little room to compromise on this one, as laws have been violated. Laws that will not be overlooked if Trump stays in power. So it is do or die for both sides.
And the market has finally caught on. We are just seeing the beginning of this plunge if the market perceives Trump losing this fight.
So I know for some its discomforting to have to try to figure out the actual facts as to what is occurring, but if you’re going to make money trading you really have to at the very least have some grasp on the reality of the situation at hand.
Every time I mention this I get numerous emails asking where do you go to get the facts. I have been reluctant to give this out as I want to stay out of the political side of the issues as much as possible.
People are too polarized right now to have any kind of intelligent thoughtful discussion of what is happening and why. So, I can leave that for family arguments:)
But I think it would be helpful to give my list. Before I do, its important to get your info from both the liberal side and the conservative side. If you only get your info from one side you will be living in an alternate reality.
On the left:
On the right:
If you read what these 5 have to say on the various issues you will not be very far off on what reality is.
All 5 are principled, logical and thoughtful in their discussions and opinions. Something that is rare to find right now.
None of the above are extreme in their views, and none of the above are in it to promote their ideology on anyone else. They, for the most part, discuss the facts and give their interpretations.
Saying that, where do we go from here in the markets.
One thing is for certain, volatility is here to stay for awhile. If your losing sleep over this, it might be time to take a 2 or 3-day vacation from the markets. Typically in downdrafts like this, you do not want to panic and sell. If you have not been stopped out now, best to sit it out.
At least until we break the 200 day moving average. That is the bellwether for being in and out of the market for me. In addition, the Nasdaq SPY indicator is still positive. That is another bellwether.
So, both of what I tend to rely on for the long side are still saying you should be in the market.
I am long a 3/4 position in SSO. I also have a position in NTAP. All are underwater of course. And these are mean reversion trades so there is no exit at least until we break the 50 %R number.
Let me also mention that the last time this happened was back when the U.S. debt was downgraded. I was in Hawaii at that time enjoying the beaches:) The downgrade came on Friday after the close. I had envisioned a massive drop at the open Monday.
But, the market was only off a bit at the open and I bailed on everything. The market then proceeded to plunge shortly after.
If I would have stuck it out for a few months, the market made a V-shaped recovery and would have ended up with nice gains in everything!
If you have been using sane position sizing your fine. If not, then consider this another lesson learned:)
Of note, as of right now the ES is 60 pts off its overnight lows and is still off 21 PTs!
It’s going to be another wild day. I doubt I will make any trades today, at least until the close.
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