Give them what they want. More stock. I am feeding the ducks this morning as we have hit an all time on the passage of the Senate tax bill and a retraction of the Flynn rumors by ABC News. It was a massive move intraday on the release of the rumors that Flynn would testify against Trump, but the rumors weren't exactly correct, and it seems less likely to be the smoking gun to impeach Trump.
I couldn't really understand why it was such big news anyway. The market is not going up because of Trump, it is going up because Republicans have control of the White House (regardless of impeachment, it just puts Pence in there) and Congress. So even if Trump is impeached, there is still a Republican president.
Controlling the executive and legislative branch is powerful, because it allows for unpopular bills to be passed with total disregard for the masses. These tax cuts have been bought and paid for by the big time donors and lobbyists, and it has been a great investment for them. There was no guarantee that a Republican was going to win in 2016, so they did take a small risk in giving so much money to Republicans. But the lobbyists give to both parties, its not a tails I win, heads I lose situation. It is more like tails I win a lot, heads I win a little.
Now that we have the good news mostly reflected in the market, it is time to get bolder on the short side. I have been waiting patiently for this time to come, so I can start trading more actively. This year has probably been the least I have traded intraday in futures in quite a while. These slow years tend to set up very active years from past experience. One of the key ingredients to getting more future volatility is having a market that is overvalued and well above its long term trend.
Friday's price action was a preview of the higher volatility that I think comes in 2018. I have started a short at these pumped up levels this morning, and it is significantly bigger than the mistimed position I took last week. Looking for a move back down to SPX 2625 this week.
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2 comments:
We're up big again on the futures. I know it sounds crazy and I don't want to believe it either but I think this market is on a short killing spree until it hits a blowoff top at 3000. It will come fast and quick probably within the next 6 months. I also expect some sectors like oil and gas need to rebound big before we can have a true market top.
Covered the ES short here. SPX 2625 came quickly. It could go down to 2600 area but I will not try to squeeze every inch out of the short side. I expect choppy trading in the 2600 to 2700 zone over the coming months, forming a top.
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