Dangerous Presidential Politics Are Close To Killing The Market

Welcome back! I hope you had a fantastic Friday and what I want to talk to you about this weekend is that precarious position that presidential politics are putting into the market right now. Normally I give you the breakout/breakdown levels and keep it at that. That’s what we do. We don’t trade emotionally. What we have to understand is there are a lot of people right now cheering on people because they want to take down Wall Street and take down the big banks. I don’t want to get anywhere near that conversation. Everyone has their opinions, but here’s the problem. The same people who want to take down Wall Street are now saying “Wait a minute, my 401K is going down. I don’t want my 401K going down.” People are having to be careful what they wish for. Right now, there is all this death to Wall Street. It used to be death to America. Now it’s death to Wall Street. When we had these presidential debates about who is going to take down Wall Street harder, you can imagine it can get some investors worried what it will happen to their portfolios.

Now people are starting to unwind their portfolios. We’re at some very pivotal areas. I’ve mentioned some of these areas before. In fact, I’ve mentioned them before when we actually bounced off of them. As we were coming down, I told you the 1800 level will be a real important level on the S&P. Sure enough, we launched off a big, fat accumulation bar off of there. Now we’ve hit falling resistance and having a presidential debate where everyone is shouting “death to Wall Street.” That’s weighing very heavy on people’s minds. If you start thinking we have someone who is willing to tax us 50%, 60%, 70%, our debt may go up 18 trillion dollars if certain social plans are put into place. I don’t mean to make this a political talk. You never ever hear me talk like this. I just tell you what you need to know about the market. You have to understand that there are a lot of people who are asking me why this is going down. They want Wall Street taken apart but they want their 401K to go up. What you have to understand is that those two different wishes may be in direct conflict with each other. Whether you’re a Democrat, Republican or whatever you call yourself, you have to really watch the S&P near this 1800 level. That’s where we had the plunge protection team come in here. We used to call it that term back in the 90s. Key levels where we don’t hold, bad things can really happen in the market. We bounce back with a major accumulation bar. With an accumulation bar, the entire area here is a key support resistance level. We hit that, bounce off. Hit that, bounce off. The problem is, the pressure keeps on going on who is more anti- Wall Street and what that’s going to mean. The threats are getting larger about how they’re going to dismantle Wall Street. It’s making people uneasy and making people much more prone to sell the market vs sell the market if you’re worried things are going to get ugly. Right now, I want you all to pay attention. If you look at the weekly basis, just below the 1800 level, we have long-term weekly resistance. We have very key long-term institutional support. We went from the last few years of having this beautiful uptrend. We took a cut in 2015 and rallied back then took a deeper cut as you can see. What this means in English? It means the market is very fragile.

Let’s take a look at another chart that I’ve mentioned to you before. It’s the monthly chart on the S&P. We get below the 1800 level and we’re cutting deeper and deeper into my channel. We rallied back up and cut deeper into the channel as you can see here. Also, my long-term fast-trigger lines on the monthly chart have been driving down for some time. That’s not a good place to be. We also had a monthly sell signal with a hockey stick sell. People just need to be very careful with the politics of Wall Street. If they’re trying to tear Wall Street down and take people’s 401Ks into 201Ks, then they can talk about how they want to kill Wall Street. Regardless of who you are and your politics, you don’t want this to go below the 1800 area, because that can lead into deeper ramifications. Everybody talks about how terrible it was back in 2008 and 2009 and how we’ve had a recovery. That recovery may come to an end here if people with their talk kill it back off. So, something to think about. This year is a big year of politics. As a trader, I love this volatility. I have so many of you who are so concerned with what you’ve been seeing. I wanted to talk about what’s in part to blame for this and what the key numbers we have to watch. This is going to be a great, great year to be a trader. It’s already proven to be. What you don’t want to do is turn a blind eye to longer-term investments. Some of these key levels are going to be really important like the 1800 level on the S&P and others that we’ll talk about in the weeks to come.

I hope that gives you a little perspective about what’s happening and what’s causing some of these things as well as some key levels we all have to be aware of in the coming weeks. They’re going to be more meaningful in the weeks to come.

Have a wonderful weekend. Looking forward to seeing you in Monday’s Live Trading Room and in Monday night’s videos. Take care, everyone!

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