Another gap up this morning with the Nasdaq leading the way up almost 1/2% an hour before the open. Financials Strong, Oils strong, metals on the green side, with TLT unchanged.
A positive bias this morning, although with TLT unchanged a gap fill trade could be considered this morning.
There is not much question that we are going to break out to new highs any time now. And no question that the recovery off the lows has been a V shaped recovery. An understatement really:)
The rebound has been quick and merciless if you were a bear. Note I use the word “were”.
One chart to keep a watch on is the weekly Nas-SP relative strength chart.
Courtesy of Rob Hannah , Quantifiable Edges.
Note the last two crossovers predicted almost perfectly the changes in market direction.
Market timing is usually a fool’s errand. However, if you are looking for something that helps this chart is certainly one tool to use. So far we are away from anything triggering to the downside.
It is far from fool proof but like good tool, it helps give you an edge.
As far as the news, tomorrow morning the Special Counsel report will be released to not only Congress but also the public. The conclusion is already known.
No Collusion was found, and as for obstruction the special counsel left it up to the AG as he could not conclude either way whether the President was guilty of Obstruction.
There is a lot of speculation since Barr gave his bottom line of the report. Most of it is pure political spin. You can bet that this is what the SC concluded, as Barr would not risk his reputation putting out a statement that was going to be followed shortly by the report. Its not logical, and I assure you he is accurate.
So for our purposes, how will this affect trading on Thursday. Remember, Thursday is the last trading day this week.
My take is that Trump’s opposition will be ready for the report, and within seconds there will be spin how the report does not conclude no collusion. How they get there it will not matter, but they will get there.
In addition, it will coordinated, across all the media at about the same time. With all of Trump’s opposition on board, which includes the Dems and the never Trumpers.
The markets I do not think are going to take this in stride. So expect some volatility once the report hits. Also in the very unlikely possibility that Barr did misrepresent something, the market will tank hard. <in reality there is little to know chance of this>. Although, what the perception might be is a different thing.
Expect a lot of chaos, both tomorrow and through the weekend. I suspect there will be plenty of paid activists out in force over the weekend.
But, when the smoke clears by next Monday, things should be back to whatever normal is.
I do not see any high percentage trade out of this. You could buy some puts heading into the close today for a short one day trade. I would pick puts a month out about a dollar out of the money. But, for myself, I do not consider that to have any particular edge. So I will be sitting it out on trying to profit from trading the release of the report. But it is tempting:)
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:) In addition, I share all my short term swing trades to subscribers.
Good Luck Today
RickJ’s Handicapping Picks