Markets are mixed this morning coming off the overnight lows.
Of note, Financials are weak, while metals are strong. TLT is also positive.
I view the premarket as slightly weak.
The markets are now firmly oversold. Typically this is an area that a bounce might come about. But, if you’re a mean reversion trader, you know that occasionally the markets do not bounce when expected. But that is factored in when you position size your trades.
Right now I have 3 positions that are mean reversion trades. I have AGN, and August 18th calls in TDC and IWM.
It appears I was a bit early but there are small positions in the scheme of thing. I like to scale in rather than take a full position on these mean reversion trades.
This morning I will be looking to add to my position. What the breadth looks like will gauge when I make the trade.
Right now it will be an SDS trade which trades 2x spy.
However, It appears we are getting a reversal to the upside as I type. So, if the market gaps up it will be a trickier trade.
On the geopolitical front things are heating up substantially with N.Korea. No one knows right now what is going to happen. Trump back in 1999 gave an interview with Tim Russert that he would make sure N. Korea does not get nukes if it were up to him.
That’s 17 years ago and it does not look like his position has changed. If N. Korea shoots 4 missiles over Japan into Guam waters it’s a tossup as I see it what Trump will do. Throw China into the mix and things could get ugly very fast.
Of course, we have all our politicians that are arm chair quarterbacks giving their 2 cents to the press. And wouldn’t you know it their opinions seem to coincide with whether they are Dems or Never Trumpers. Almost in lockstep, these two groups are critical of the White House.
So I guess, the country coming together in times of a potential crisis is out of the question.
There is an exception to the above in the Al Gore came out and said that Trump inherited an impossible situation. That is more in line with what I would expect at times like this.
You are getting a whiff of what is going to happen to the markets if the special counsel brings charges against Trump and impeachment talks start getting serious. This downdraft is nothing compared to what you will see then.
Another thing to keep in mind is the debt ceiling. When Congress gets back they only have days to figure that one out. The Dems are already threatening to shut down the government if the wall does not get scrapped.
As to the political odds front, the odds to watch is the Alabama special election where you have an establishment Republican going against a Trumper. The odds have now switched back to Moore being a 5 to 4 favorite over Strange.
The establishment has sunk millions into Strange and this election will set the tone for 2018. As I said, my premise is that the Establishment Republicans are going to get shellshocked in 2018. But not by the Dems but by the Trumpers.
I have to end this as I am behind the curve this morning. But another good wager I see is that the Republicans keep control of the house. Right now is about even money.
My guess is that the odds should be 3 or 4 to 1 in favor of the Republicans.
It is easy to listen to the mainstream media and come to the conclusion that Trumps has a low 30s approval rating. That is what you hear every day now. But a strange thing is happening over at Rasmussen. Trump’s approval rating is going up substantially. 5 points this week up to 44%.
Use Rasmusson as a gauge and you will get a more accurate picture of what is going on. However, my theory is even Rasmusson is understated. After all, the every day American, who reads about attacks on trump supporters is very unlikely to broadcast their support. So you can add 5 to 10 points and you will be very close to the real picture.
Now if you’re a Dem you will not like to hear this. But, if you’re solely a political animal that is fine. If you’re a bettor who is evaluating the lay of the land it should mean nothing to you. except to guide you to a good wager.
So again this morning I am looking to add a bit to my mean reversion trades into SSO.
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