Trade War Jitters

The insipid price action of yesterday made for a day about as exciting as watching paint dry.  Then after the bell, the White House stated that the President is considering raising tariffs by 25% on Chinese goods.  Markets hate uncertainty and re-ignition of trade war jitters moved Asian and European markets sharply lower overnight.  US Futures are currently pointing to a significant gap down which will beak important price support levels and current trends in the index charts.

If you have money at risk, there will likely be losses today.  Try to avoid emotional decision such as chasing short trades or revenge trading.  Often that will only serve compound the losses.  Follow your trade plan and stick to your rules.  Taking a loss is never fun, but it’s part of being in business.  When is it good to take a $500 loss; When you have to take a $1000 loss later!  Stay calm, focused and disciplined.

On the Calendar

There are two potential market-moving reports on today’s Economic Calendar.  At 8:30 AM Eastern consensus expects a reading of 218,000 in Weekly Jobless Claims vs. 117,000 last week.  Then at 10:00 AM Factory Orders forecasters expect a solid increase of 0.9 percent.  We have the Natural Gas report @ 10:00 AM, two bond announcements @ 11:00 AM,  the Fed Balance Sheet & Money Supply closing the calendar day at 4:30 PM.

On the Earnings Calendar, we have nearly 500 companies reporting earnings today to keep us on our toes.  Make sure your checking date on stocks you own or are thinking of buying.

Action Plan

Yesterday’s price action was choppy and with a slightly bearish feel even after the FOMC decision not to raise rates this month.  Asian Markets tumbled during the night after in response to the President’s consideration of raising Chinese tariffs by 25%.  European markets are also sharply lower, and the US Futures are pointing to a gap down of more than 150 points as I write this.

I would suggest caution today as the market reacts to trade jitters and creates technical damage in the indexes by dropping through current support levels and trends.  Obviously, a morning gap down like this can create a lot of emotion and traders see once profitable positions turn into losses.  It stinks but its part of the business, and we have to roll with the punches and avoid making emotional decisions.  This is not the market to rush in and buy the dip.  Remain calm, focused and disciplined to your rules and trading plan.

Trade Wisely,

Doug