Quite a rally we have here. Think if you were a mean reversion proponent on the short side of this market! A nightmare for those that are.
There is plenty of news that under normal circumstance might derail this market but this is not normal now. After all, just 30 more days and these stifling business regulations have the potential of being lifted. In addition tax cuts for business’ are around the corner. Infrastructure spending is around the corner. Pro-government for business development is around the corner.
So rightfully so the markets are anticipating some very positive things from the change in administrations. Now, what the markets have yet to put into the picture is that some of this will need to be approved by Congress. And the Republicans have only a 4 vote advantage in the Senate.
Under normal circumstances that would be enough, especially with the Reid Rule formerly called the nuclear option, but republicans do what they do best. Battle themselves even after making historic wins. So nothing can be taken for granted except that you will have all but 1 or 2 Democrats opposing Trump in Congress and then it will come down to the recalcitrant Republicans, like Grahm, McCain, and Rubio.
It will be interesting to see how it plays out. I am sure Julius Ceasor was thinking the same thing:)
Monday also is the day of reckoning when the Electors vote. If you believe the Democrats it will be very close on the other hand if you believe the Republicans only 1 faithless elector is Republican.
My guess is the republicans are right on this one. But there is still the weekend to intimidate and perhaps harm electors to get them to change their votes. So who knows what will happen over the weekend. The only certain thing is that these poor electors are going to be confronted with an untold amount of pressure to change their vote.
So far the markets have also ignored this development in the election. I find it amazing that it has not tanked by this but evidently, market participants feel this is a non-event. We will see. But…..be aware of the potential that this could cause in the markets. As I said yesterday 1000 pts to the downside on election night will be peanuts compared to what you will see if the electors either do not vote on Monday or change the outcome of the election.
If I traded straddles and the premiums were not so high in the indexes I might consider a weekly straddle going into Monday. But that type of trade is not in my repertoire.
We are 45 min before the open with SPY off .34% and QQQ only off .05 %. The weekly SPY QQQ spread still has not triggered a trade to the long side and today is the final day of the week for that to happen. The spread is closing but it would take a big move by QQQ over SPY to trigger it today.
I am long looking to get longer today. I broke my BO day trade streaks with two winning trades the other day and will be looking for a few this morning shortly after the markets open. But primarily I will be looking for 2 to 3-week swing trades to take advantage of the tailwind historically the next two weeks brings.
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