While we wait for Powell tomorrow, A short term swing setup to consider. My thoughts

After a nice move to the upside on Monday, the market appears to be heading for a soft open this morning.
 
Usually, I would say a down open with the Nasdaq off 40 premarket. But with 150 pt daily swings in the Nasdaq common now, down 40 does not seem that significant anymore:)
 
With the Fed head set to testify on Wedn, the question is how do you play it. Certainly, if Powell does not change his tone on rate hikes the markets are heading lower. If he softens up a bit, then higher.
 
At least that is the theory. In the markets, things do not always go according to Hoyle:)
 
But, as a general proposition, that is most likely correct.
 
So if your good at predicting the Fed, there is money to be made. One other thing to keep in mind is the buy or sell the news tendency of the markets.
 
That would go this way. Anticipation is that Powell is going to be tough on rates. The market dips ahead of his announcement. He is tough on rates. And we get a rally.
 
So, with announcements coming up it is important to watch what the market is doing up to the event.
 
As a general rule, when you see the market react strongly prior to a major event, you can usually fade that move immediately before the event occurs.
 
From my perspective, this is a short-term setup that should be in your arsenal.  And it repeats itself over and over.
 
A Caveat however, sometimes the event is so shocking you get a continuation rather than a reversal. That is what you have to be aware of when you trade this. Nothing is free money, so, all your position sizing and money management techniques should be used.
 
So just for the fun of it lets see how it plays out tomorrow. For the timing:
 
Jerome H. Powell, Chairman of the Board of Governors of the Federal Reserve System, will be testifying before the committee on Wednesday, December 5, 2018, at 10:15 a.m.
 
I am on PST time. So that is 7:15 here. If we get a down day today, with a dip tomorrow morning prior to 7:15 my theory suggest buying the dip just before the testimony.
 
This is not a trade you want to stick around for long in. But a good measure of when to exit a bounce would be to use the 4 period EMA on the 15 min chart, 30 min chart or 60 min chart. depending on how the day seems to be setting up.
 
If it appears to be a trend day move, I would use the 30 or 60 min EMA. Range day, you could exit at an established profit figure or prior resistance. For a quick trade, just use the 15 min chart.
 
That would be on a close only for the period. That helps avoid whipsaws.
 
The markets after yesterday have reduced their oversold condition on a short-term basis. I am still long a 1/4 position in SPY via SSO and am waiting for my exit signal which should come soon with any kind of follow-through from yesterday.
 
As most of you that are aware by now, I have a keen interest in the political environment and how it relates to the markets.
 
In addition, it’s interesting to see the various theories out there as to the various players in what is unfolding now in the U.S.
 
I read an interesting thread this morning that if you have an interest in alternative theories as to the events unfolding, should entertain you.
 
https://threadreaderapp.com/thread/1067215656758714368.html
 
Not that I ascribe to any particular theory, as I am more of a what you see is what you get type of person. But I do enjoy a good espionage movie with a lot of twists and turns.
 
Let’s see what today brings, Usually after a big move you either get a pullback or a consolidation day. So far, its hard to predict what today is going to end up like. There is some Fed speak today so that might also have an effect.

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

https://rickjshandicappingpicks.com/investing

Skype: Ricca

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