It’s a new year and I doubt that the stock market will produce the returns of 2016.
There is just too much in the background for that to happen in my opinion.
1. You have Yellen in tightening mode (a big mistake) So big you have to wonder what is motivating her
2. The Mideast is ready to explode again thanks to the current administration’s lighting a fire in the region before they leave
3. The Geopolitical tensions will be increasing between Russia, China, and Iran with unknown outcomes
4. The polarization that has been nurtured in the U.S. over the last 8 years has finally reached its breaking point which will damage our economy. Boycotts are now the norm on both sides. This has damaged some pretty big names the last year. I expect it’s going to get worse.
5.The Social Programs were ready to reach a breaking point a few years ago. With the influx of Illegals across our Southern Border, I suspect that might tip the scales and finally bankrupt our social programs.
6. There will be a showdown regarding Sanctuary Cities this year which will not only produce civil unrest but will affect the financial health of the cities involved. Federal aid will most likely be shut off from cities refusing to obey federal law with the potential of criminal penalties being imposed. This is no laughing matter.
There are more but I do not have the time to list each one. But the above gives you just a glimpse of the background in with the stock market is going to have to deal with this year.
Some things to note that are very important. The transition of the government is not finished until Jan 20th. In every other transition period that I can recall the leaving administration always consulted with the incoming administration before making any big policy decisions.
For whatever reason, this administration has taken the exact opposite position. Monumental decisions are being made without any input from the incoming administration. Not only that they are decisions that it is known the incoming administration is not in favor of.
So why then would they do that? What possible reason would a leaving administration assure a rocky transition of power? It has gotten so bad that the new administration has threatened an investigation which I anticipate will be begun immediately.
A date to keep in mind is Jan 15th when countries are going to get together lead by a lame duck administration in France to most likely dictate a 2 state solution in the Mideast.
This is the same group that in their wisdom that it was a great idea to remove Gadafi. The results of that decision were catastrophic for not only Libya but also the world.
So, I suspect before the current administration leaves on the 20th they will take some more parting shots in the Mideast and elsewhere. This market is subject to disruption for the next 18 days.
The one bright spot I can see is the incoming administration’s position toward Putin. If they get their way the two countries will reconcile some of their differences and work together combating terrorism. The problem is there are some people that want to go back to the McCarthy area. Which if you can recall was a very scary time with people’s lives being destroyed for nothing except fear mongering.
Regardless of what you think about other countries policies the smart approach is to work together on common interests and respect each other. Just because they have a different ideology does not mean the U.S. should be working on Regime change. Certainly even the most stubborn will have to admit that the U.S. regime change policy has been catastrophic not only for the world but also the U.S.
So this will be an overriding theme this year. Trump will want to move to reconcile with Russia and China while many will accuse him of treason and selling out America. Most of the accusations will be purely political. There will be many that have got a taste of the effectiveness of Alynski tactics and will not let go regardless of the damage to the U.S.
That’s a very short rundown of some of the things to expect this year. It’s not all a downer however as if Trump sticks to the plan and the Republicans do not oppose him good things will happen. But that is a big if. Already McCain and Grahm are out taking a position publicly that they know is contrary to what the incoming president and most of the U.S. do not want.
I am long and on Friday I added a second 1/4 mean reversion trade.in SPY. These trades have well-defined exits and do not have stops. So unless you have very strict position sizing methods they are not for you. They can be very volatile trades and that is why I leg into them with 1/4 position at a time.
In addition, I have some swing trades on and a gold trade that also has a set predesigned exit strategy.
I went a bit longer than usual this morning and I could have gone much longer. If anyone has any questions regarding the above please send me an email and I will be happy to discuss it with you.
Before I end this let me tout my handicapping which of course I am very proud of:
My documented results for 2016 with Sportswatchmonitor.com
2016 OVERALL Units Pct
BAsports 74000 55.99
Britney DeLuca 52290 52.88
Late Winners 41050 52.61
Maddux Sports 39640 55.87
Rick J’s Handicapping Picks 38615 51.01
I came in 5th overall combining all sports for 2016!!! There are some pretty big names being documented here. So I am very happy with how 2016 has gone.
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