As of this morning, the 50-day moving averages are:

• Dow 24,364, now 24,072 on /YM
• S&P 2,628, now 2,604 on /ES 
• Nasdaq (100) 6,640, now 6,650 on /NQ
• NYSE 11,924, now 11,850, (no futures)
• Russell 1,450, now 1,449 on /RTY

To say that we are at a critical inflection point in the market would be a huge understatement and, as I noted in Tuesday morning's PSW Report, we took precautions against a downturn by adding hedges to our Short-Term Portfolio in Monday's Live Member Chat Room – just in case things spiral further out of control.

On the whole though, we're still a bit optimistic, though we are looking to cash out some longs today – so we will have less to hedge against, which, in turn, makes our existing hedges more powerful (as they will be hedging a smaller amount of longs).  It's going to be easier to have a positive event – like ending the shut-down or agreeing with China or a Brexit Deal – than it is likely to have an event even more negative than the damage we're causing to ourselves (maybe that strange asteriod is an alien invasion?).

Meanwhile, our current economic momentum is down so SOMETHING needs to change or things will really start falling apart.  Both the US and China are suffering from Trump's idiocy and the US is also suffering from Trump's other idiocy but the UK has their own team of idiots that are ruining their economy with a little help from the idiots in the EU, who seem to flip-flop between dancing on England's grave and worrying that an unscripted Brexit will also be the beginning of the end for their Union as well.

Maybe I might have changed 
And not been so cruel 
Not been such a fool 
Whatever was done is done 
I just can't recall 
It doesn't matter at all 

You see it's all clear 
You were meant to be here 
From the beginning – ELP

The markets turned sour…

Well, we're making no progress.

On Friday we looked at our bounce levels and we were encouraged that we'd improved enough to be a bit more confident into the weekend but the ongoing Government shutdown by the President is making us more and more concerned every day – especially with the mounting evidence that President Trump may be a Russian Agent who's actual intent is to weaken this country.  Still, the entire GOP is going along with this insanity and they can't all be in Putin's pocket – can they?

Even if Trump isn't destroying America on behalf of Vladimir Putin, he's still destroying America so we added some hedges to our Short-Term Portfolio yesterday in our Live Member Chat Room in order to lock in our recent profits as well as to protect ourselves from the next Twitter rampage coming out of the oval office.

Trump is meeting with Congress this morning and, hopefully, it will go better than Friday's meeting, where he threw a tantrum and walked out because Nancy Pelosi said no to his wall – even after he offered her candy.  Meanwhile, you can see the Brits debating Brexit all day and all night in their Parliament because, when something important is affecting your Government – a real Government tends to focus on the problem.

That's a live feed – how cool is that?

Don't even try to compare that to CSpan – it will make you cry.  British Parliament is based on debate and consensus so any MP is a skilled orator – it's basically a job requirement.  Most of our Congresspeople can't put two coherent sentences together without their entire staff working overtime to prep them and God forbid our Congresspeople get interrupted – that's game over for them but that's the entire game in the UK – a much better way to discuss the issues.  

With about an hour to go before the markets open, the Futures are down a bit and that may not seem bad but the Dow (/YM) Futures were up 200 points around midnight and have since collapsed…

Well, we're right on track…

Back on Dec 26th, in our Morning Report, when the market was collapsing, we began playing for a bounce.  At the time I said:

Each month the Government is closed knocks 2% off our GDP and the slowing economy will contract wages and Corporate Profits and, guess what?  That will make the deficit explode as it lowers the rate of tax collections.  That's why the market had such a harsh reaction to this shut-down but it's still been an over-reaction nonetheless and we are certainly now looking for at least a weak-bounce correction, which would be a 4% gain on the indexes from these levels.  Let's call it from the 20% correction lines:

• Dow 27,000 to 21,600 is 5,400 points so 1,080-point bounces to 22,680 (weak) and 23,760 (strong) 
• S&P 2,950 to 2,360 is 590 points so 120-point bounces to 2,480 (weak) and 2,600 (strong) 
• Nasdaq 7,700 to 6,160 is 1,540 points so 300-point bounces to 6,460 (weak) and 6,760 (strong) 
• NYSE 13,200 to 10,560 is 2,640 points so 528-point bounces to 11,058 (weak) and 11,586 (strong) 
• Russell 1,750 to 1,400 is 350 points so 70-point bounces to 1,470 (weak) and 1,540 (strong)

Remember:  I can only tell you what is likely to happen and how to profit from it – the rest…

Pretty, pretty please?  

Mommy and Daddy had to put up a unifed front last night and tried to explain to Donald, using very small words, why he couldn't have a great big wall to play with.  The wall would be "expensive and ineffective" Pelosi said.  “Democrats and the president both want stronger border security. However, we sharply disagree with the president about the most effective way to do it,” said Schumer.  Donald also said the Santa Mexicans were going to pay for his wall and that turned out not to be true and Mommy and Daddy said we simply can't afford a $30Bn wall this year ($5.7Bn is just the downpayment to get started). 

Not only that but, once you get the wall home, it's expensive to keep as you need 2,500 miles worth of guards and then there's the repair bills – which we don't pay on the other infrastructure we already bought.  It's like when you let a kid take care of a goldfish before trusting him with a puppy and President Trump has given us a very dead goldfish as far as infrastructure goes and now, rather than repair roads, bridges, damns or power-lines, Trump wants a new wall to play with but, as responsible parents, we already know it's only going to end up neglected like all his other toys. 

Of course, Trump's temper tantrum which is ruining the lives of 830,000 Federal Workers and the Millions of Americans who depend on their services, is not just about the wall.  “This president just used the backdrop of the Oval Office to manufacture a crisis, stoke fear, and divert attention from the turmoil in his administration,” Schumer said.  Democrats have urged President Trump and Congressional Republicans to support legislation that would reopen the government while they continue the debate over border security.  “President Trump must stop holding the American people hostage, must stop manufacturing a crisis, and must reopen the government,” Speaker Pelosi said.

This was the first speech of Trump's Presidency from the Oval Office and, though it started out sort of Presidential, it quickly veered back to the usual fearmongering and completely made-up…

Well, we're still closed.

Today is, officially, the first day Government workers will actually not get paid.  Already we've seen TSA workers have sick-outs for protest and things are going to get much worse as Trump's Saturday and Sunday meetings with the new Congressional Leaders resulted in NO DEAL as Trump maintains his "wall or nothing" stance.  

Meanwhile, Trump has said he is going to declare a State of Emergency in order to fund the wall but he's already lost that court case by announcing that he's going to make up an emergency just to fund a wall – what an idiot!  I hope you enjoyed Friday's December Jobs number because, as of this morning, 420,000 people are working without pay and 380,000 people have been furloghed – a nice way of saying temporarily laid off.  

Trump has said he won’t sign any bill funding the government that doesn’t include $5.7Bn in border-wall funding that was part of a measure signed by the GOP-controlled House in December which THEY couldn't pass then, before Democrats took over the chamber. Two Democratic aides said Sunday that an afternoon meeting was delayed by 45 minutes because Republicans weren’t ready with documents to explain why that $5.7Bn amount was needed for the wall.  Keep in mind this is after two full years of sayinging they needed a wall.

The much bigger deal this week is the resumption of trade negotiations with China and we can expect a rumor-driven market until something official is announced, which could be a few MONTHS – if at all.  As you can see, Trump was tweeting out great progress on Dec 14th but that same day, as soon as China said they had no idea what he was talking about, the markets began their second 10% leg down – so be very careful trusting the President – not that you should need a warning about that by now….

We have 9 Fed speakers this week and the release of the last meeting's FOMC Minutes on Wednesday but not all that much data as the Government Shutdown is pushing back a lot of reports so we'll be flying fairly blind into earnings, which are…