Those that panicked on the open yesterday were taught a solid lesson. The market turned around and showed some nice gains in the Nasdaq by the end of the day. The other indexes were down only slightly.
I had one position that was off 5% at the open only to close +1.5% on the day.
The open is a time to perhaps meditate for 15 min and do nothing. In addition, for those of you that like tight stops, the open is no place to have them on. Wait 15 min and then start putting your stops in place.
Myself all my stops are mental stops without exception. I learned the hard way about stops on the open. This is another RickJ given. The liquidity drys up on the open and the ranges can be extreme at the open.
If you’re worried about a pt of 2 past your stop price then you need to take that into account on position sizing.
This morning, markets are slightly down. Oil is strong but that is the only thing of significance I can see.
As far as what to expect. We are definitely oversold and the trend is still strongly to the upside.
My view is we are in an area to consider adding to mean reversion trades. I did not do that yesterday as $ADD was in Trend day down territory. So I missed the chance of adding.
But one never knows, another swing to the downside and I will be adding to my spy trade via sso.
On the political front, it’s the same old song. I am sadly seeing that our two party system is rapidly in jeopardy. When one party does not accept the results of a national election, the Democratic process is finished.
It has taken years to reach this point in the U.S. but we are now facing the worst threats to our government now. Not from outside sources but from within our country.
It seems like human nature is taking its toll on the U.S. What was once the pride and joy of the world are rapidly becoming the laughingstock of the world.
For those of us, that gamble every day we know how destructive human nature can be. So we can observe the day to day happenings in our country and have some perspective that others might not have.
Make no mistake about it, when the line is crossed, and in a 2 party system the other party does not accept the results of an election while also promoting “resistance” by their leaders and special interests that are funnelling enormous amounts of money to keep this charade going, it is not long for things to spiral out of control.
I blame both parties for this, not just one party. It takes two to tango, and we have both parties feeding on each other now, with no leader coming out to bring some sanity to things and pull the country together.
Who ever would have believed after all the lives that were destroyed during the Joe McCarthy era that we would be back in 2017 where politicians were back promoting McCarthyism again.
But it is human nature at work. The self-destructive nature of humans is astonishing. As a book I read years ago put it so appropriately in describing the state of humans:
From Metamagical Themas: Questing for the Essence of Mind and Pattern by Douglas R. Hofstadter
“ingenuity and innovation at the individual level but at the group level flirtation with self-extinction”
I read this book when it was first published in 1985 and it is as relevant today as it was then. I highly recommend it if you wish to have a bit more insight into the insanity prevailing the U.S. and the World today.
I got off track a bit this morning but this is very important for the markets.
You can see the results of this by the headlines that over 1/3 of retail stores in malls will be closing in the next few years. In addition, the constant boycotting of a business that has a different opinion is gaining steam and out of control. Not only has this boycott been against a business but also states that choose their own path.
I could go on and on, as this has spread into the world arena now also.
The bottom line is now is not the time as I see it to have 100% of your wealth in the stock market. Now, more than ever you need to be diversified.
Myself, I have chosen to be diversified with a mix of bonds and stocks. But on the stocks, purely swing trades Period. I view the markets as very high risk right now. Primarily because of the political backdrop that is prevailing in the U.S. now.
Perhaps, at 70, I have become a cynic and my wide-eyed innocence is gone:) Perhaps, but I still do not think I have lost my ability to reason just yet. In addition, I do not think It has been diminished one bit as time has rapidly gone by.
But as I often say, we will see! I always take into consideration that my perspective might be off for known and unknown reasons, in handicapping, stock trading and in life. I always factor that into the equation:)
Today I am looking for some mean reversion trading and would like to trade a breakout trade or two with the market oversold. They are not easy to find right now but I have a few stocks on my list.
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
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