Markets gapped down a bit Wednesday on trade fears prompted by President Trump’s Tuesday speech and threats of new tariffs. However, the bulls stepped in as usual and drove the indices quickly back to flat. Fed Chair Powell made no waves with his Congressional testimony and there were no major twists in the Impeachment hearings. So, markets treaded water most of the mid-day before the SPY, DIA and QQQ all closed at new all-time record highs again.
Among the news driving markets Wednesday was DIS reporting very good subscriber sales for their new streaming service and NKE saying it will no longer sell directly to AMZN. On the trade front, China reported that it will not be buying $50bil in US grain (as President Trump has repeatedly touted) and don’t want to set a specific amount on what they will buy. Moreover, they also repeated that tariff reductions are needed for the so-called "Phase One" of a deal. This may have just been another tit-for-tat reply to the President’s tariff threats from Tuesday. Regardless, this news stream is likely to continue as a Deal our President says was done appears to be anything but done.
At the end of the day, the EU reported that it “expected” President Trump to postpone tariffs on European Autos (as was done in May). However, there was no word of another postponement out of the White House. (Wed. was the deadline to postpone them.) Then after hours, CSCO and NTWP both reported beats.
Thursday economic news includes PPI and Weekly Jobless Claims (both at 8:30 am). Fed Chair Powell also testifies before Congress again at 10 am, but Impeachment Hearings will likely grab the spotlight. The only major earnings Thursday will be WMT and VIAB before the bell and AMAT and NVDA after the close. (WMT already reported a beat this morning.)
Overnight, Asian markets were all in the red. In Europe, markets are mixed with the FTSE, DAX, and most others in the red, but the CAC and a couple others in the green. As of 7:30 am, U.S. futures are all just on the red side of flat.
The Impeachment hearings are likely to drive markets Thursday. (Fed Chair Powell is very unlikely to say anything to the Senate that he did not say to Congress on Wed.) However, more twists on the China Trade War front may also occur. Regardless of what shocks that may come, remember that the bulls have been extremely resilient in recent months. So, don’t over-react to temporary whiplash. Try to follow the trend. Be cautious and continue to take profits and move stops.
Swing-Trade Trade ideas for your consideration. Long – KHC, ALLE, ARNC, IFF, CVX, CDW, K, MAS, KLAC, SWKS, PNR, SYY, FBHS, AMP, UTX. Short – TGT, STZ, CINF, JCI, F, MOS. Trade smart, take profits along the way and trade your plan. Also, do not forget to check for upcoming earnings. Stocks we mention and talk about are not recommendations to buy or sell.
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