For Now This Is A Stock Market That Will Be Ruled By Short-Term Traders For A Few Weeks

This morning as I write this the DOW futures are up 700 points around 6:30 AM EST.

Gold is trading up above $3000, up 1.71% and I expect it will only continue to outperform the S&P 500 for the rest of this year and the next several years.

As far as stocks go the bigger moves are overseas, as they have been since New Years, with the Japanese stock market up 6% and Nasdaq futures up 1.24% at the moment.

If I was going to become a currency speculator I would buy the yen.

Since this US stock market decline started a few weeks ago I have not gotten a single email, phone call, or text message from a single person worried about the market decline.

I don’t think the market is going to go straight back up here to its highs, without spending weeks of gyrating with high volatility first, and it may not even be able to make it back up there once it does have a sustainable rally.

This game isn’t about predicting the future, but going with the trends.

Yesterday was the biggest trading day in terms of volume in eighteen years for the US stock market and one of the wildest days in the markets I have seen since 2008, because the DOW gapped down over 1000 points, rallied into the green, and then finished down 349 points. The S&P 500 at one point was up 7% from its morning low and then gave up almost all of those gains. Wild gyrations were taking place not only in stocks across the board, but in currencies, and some of the precious metals complex too.

It was MASSIVE intraday volatility I hadn’t seen since the financial crisis of 2008.

Now I don’t think this market is like 2008, more like the year 2000, when the Nasdaq peaked that Spring, but back in 2008 there were multiple days in which the DOW made similar wild intraday gyrations as what happened yesterday.

This action is likely to continue for the next few weeks, even if we have seen the bulk of the losses for the markets off of their highs on this decline. I hope that is the case, but there is nothing I can point to in order to prove it to you.

What this means to me is that for the moment this is a market in which daytraders and institutions playing short-term trading games are going to rule.

I personally am not interested in a daytrading these markets, because I am more of a position trader who wants to hold for long-term capital gains, or in more volatile markets take positions on trends that I can think will last for a few months or weeks.

It’s going to take a few weeks for me to want to do that, because for now I think we aren’t going to see many sustainable moves in the markets. that last for more than a few days.

As for stocks to invest in, if you think about the tariffs one stock that it is probably best to avoid now is AAPL.

Most Iphones are built in Vietnam and China and the tariffs are going to jam up the prices of those phones by hundreds of dollars.

The workers in these factors are paid like slaves, so if Apple where to actually move these factories into the United States their costs of Iphone production would completely explode.

Iphone sales are going to suffer as they are forced to raise prices, I don’t see anyway around it, so I would avoid AAPL stock now.

I don’t own an Iphone, but if I was an Iphone fanatic I would upgrade now before the prices go up.

Apple isn’t the only phone company out there that has stocks that trade on the markets that you can buy.

We all see the stock market move up and down, but this is a time in which the entire world is changing and gold is serving as a safe haven in this time of turmoil.

One thing that is happening is that Trump is again demanding that the Federal Reserve lower interest rates in his social media posts and many stock market investors want that to happen, because they believe it will make stocks go back up faster, but if the Federal Reserve does that inflation will totally explode again.

That’s where we are at now.

Hopefully, the Fed won’t have to lower rates this month.

I don’t think they will.

I actually think the market will be having a real rally by the time we get to May and the economy, and even inflation, won’t be as bad as people expect they will be this summer.

-Mike

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