So why\u2026 you may ask\u2026 did I tell my subscribers to sell our short exposure?<\/p>\n
I\u2019ll answer\u2026 because the risk\/reward setup has changed.<\/p>\n
I\u2019d been watching all the various financial news networks (CNBC, Bloomberg, Fox Business) since very late Tuesday night (yes, in my home office I have four television sets\u2026 three are set to business news\u2026 one is on ESPN). All of the networks were horribly bearish about the Cohn resignation, and about the prospects for a trade war over the proposed steel and aluminum tariffs.<\/p>\n
So, my thinking is that the bulk of the potential \u201cbad news\u201d is already baked into the market.<\/p>\n
What happens if we get a favorable NAFTA negotiation as a result? What happens if the tariffs are much less than previously suggested? If our trading partners say, \u201cYou know what? Tariffs are bad. So if you\u2019ll agree not to impose tariffs on us, we\u2019ll drop our existing tariffs on you,\u201d what then?<\/p>\n
For the past few weeks, I\u2019ve been arguing for a retest of the 2581 closing low on the S&P. And, frankly, I still think we\u2019ll eventually get back to that level.<\/p>\n
But the market is already so familiar with all of the potential pitfalls. It seems to have already discounted the risks. And now \u2013 it seems to me at least \u2013 the risk is on an upside surprise.<\/p>\n
I\u2019m not betting on it. I\u2019m not going to tell you to get aggressively long stocks right here. But I think the short sellers are too confident. And I don\u2019t want to be part of that group if we get any sort of bullish news over the next day or two.<\/p>\n
Remember\u2026 I\u2019m looking to buy aggressively when\/if we get a retest of the 2581 low. That\u2019s the BIG play in this scenario.<\/p>\n
I\u2019ll happily take advantage of short-term overbought and oversold conditions to execute quick trades. But I think the real potential for making big money is going to be on buying the decline towards the 2581 low. That\u2019s going to take at least a few days \u2013 or maybe even a few more weeks \u2013 to play out.<\/p>\n
Stay nimble with your trades. But, mostly, stay with a big chunk of cash.<\/p>\n
Best regards and good trading,<\/p>\n
![](\"https:\/\/casey-assets.s3.amazonaws.com\/images\/misc\/jeff-clark-signature.png\")
<\/p>\n
Jeff Clark<\/p>\n
Reader Mailbag<\/strong><\/h2>\nToday, two notes from Delta Report<\/em> readers on a recent Direct blog post, \u201cI Wish I Could Fire 20% of my Subscribers Every Year<\/a>\u201d\u2026<\/p>\nHello Jeff. Your attitude towards the markets that you comment on has had a very beneficial effect on my discipline towards all areas of trading\/investment, for which I am most grateful.\u00a0Actually, it seems to me that many of your other subscribers (not the 20%<\/a>, of course) are saying something similar, but in different words.<\/p>\n\u2013 Alan<\/strong><\/p>\n<\/blockquote>\n <\/p>\n
I saw your note from Friday.\u00a0I\u2019m still new to your service; I subscribed in October 2017. I did write to you about being wrong about the selloff (you were right).<\/p>\n
I\u2019m still\u00a0happy about your service. I\u00a0bought GE calls, made sense\u00a0to me this time. I have to be honest\u00a0it wasn\u2019t easy because of my bias\u00a0toward this company.\u00a0Why isn\u2019t\u00a0Jack Welch in jail? (Loving DDD, too.)<\/p>\n
Have a great week!\u00a0Hoping for a new pick this week;\u00a0I know, the market needs to chill!<\/p>\n
Hello Jeff. Your attitude towards the markets that you comment on has had a very beneficial effect on my discipline towards all areas of trading\/investment, for which I am most grateful.\u00a0Actually, it seems to me that many of your other subscribers (not the 20%<\/a>, of course) are saying something similar, but in different words.<\/p>\n
\u2013 Alan<\/strong><\/p>\n<\/blockquote>\n
<\/p>\n
I saw your note from Friday.\u00a0I\u2019m still new to your service; I subscribed in October 2017. I did write to you about being wrong about the selloff (you were right).<\/p>\n
I\u2019m still\u00a0happy about your service. I\u00a0bought GE calls, made sense\u00a0to me this time. I have to be honest\u00a0it wasn\u2019t easy because of my bias\u00a0toward this company.\u00a0Why isn\u2019t\u00a0Jack Welch in jail? (Loving DDD, too.)<\/p>\n
Have a great week!\u00a0Hoping for a new pick this week;\u00a0I know, the market needs to chill!<\/p>\n