Monday, January 23rd, 2017

WallStreet’s temper tantrum not over,

You can see that in market action. More good news poured in, existing home sales were up. Like spring flowers in bloom, there is good news everywhere about the economy . This acts like gangbusters for normal markets, but we don’t have a normal market anymore. Last Thursday’s horrific sell off when Senate passed the biggest financial reform since 1930s hasn’t ended yet. Today’s market action lacked volume, meaning there were no buyers in the market, few sellers and they took center stage and pushed the market down.

The politics of this bill is well summarized in this video from Tech Ticker by Aaron Task. This is a sweeping reform which touches the lives of everyone out there if you are an adult and living in America. It covers credit cards, lending, mortgages and banking regulations and derivatives and everything under the sun.

The Senate bill has to be reconciled with House and the army of lobbyists sent to Washington is twisting  arms on both sides of Congress to water down and flush the bill down the toilet. As per President Obama -Wall Street has spent $1 million dollars per member of the house on this campaign and in the coming days and weeks they plan to spend more. The more they can spend, and the more they can kill reform, or water down key elements of the bill, the better it is for special interests side winding American public.

Basically the mood is not festive in trading either. Today’s Market action shows a mood of resignation and quiet anger. Major players showed no interest in picking up cheap shares. They all seem to sulk and sit it out.

The fundamentals of the economy couldn’t be any better.

” The outlook amounts to an encouraging report card on the economy at nearly the one-year mark of the recovery, which the experts date to June 2009 when the recession hit bottom.

Although risks involving Europe have recently escalated, the outlook in this country has improved in most respects,” said Lynn Reaser, the group’s president and chief economist at Point Loma Nazarene University. “Growth prospects are stronger, unemployment and inflation are lower, and worries relating to consumer retrenchment and domestic financial headwinds have diminished.”

We should expect a lull in the markets, before a another fresh wave of selling may hit again. Therefore its advisable not to load up long positions unless SPX closes decisively above its 200 day moving average and than it will act as a beam of support from which selling it off would be lot harder than it is now. We have fresh trades waiting to be executed but only if SPX is above 1100. Both NDX and RUT are above their 200 day moving averages and ahead of the game. Its may be safer to trade some tech stocks at this point alone.

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