More Trade Talk and Worry

On Thursday, the bad news was that stocks posted their first 3-day losing streak since July.  In the process, they broke their uptrend, which began back in early October.  The good news is that this “selloff” has only totaled about one percent...and it was a well-needed rest after a strong six-week rally.   

This pullback/pause has seemed to happen over indecision about the outcome of the Trade War with China, etc.  Unfortunately, this is likely to continue simply because international trade is such a massive part of GDP around the world, including the US.  Therefore, trade is a large driver of earnings and, therefore, stock markets.  Moreover, it is likely that finding themselves in this conflict, the Chinese have no reason to rush to an agreement or make concessions, because President Trump faces an election next fall, while President Xi never will. The point is that we traders need to adapt to this new normal. 

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Perhaps the best news of the day is that Impeachment Hearings are now concluded.  Obviously, there will be debate and votes on this case, as well as possibly a Senate trial.  However, at least until that trial, these will be limited to being reported in sound bites now that the public hearings are concluded.  Beyond that story, Friday’s major economic news includes the Nov. PMI (9:45 am) and Michigan Consumer Sentiment Survey (10 am).  The only earnings of note before the bell are FL and SJM.

Overnight, Asian markets were mixed but mostly green.  In Europe, all markets are in the green as well at this point.  As of 7:30 am, U.S. futures are pointing to a quarter percent gap higher. 

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Remember that even with the uptrend line broken, we are not far off the highs and we did need a rest.  So, be careful about getting too bearish or over-reacting.  Yes, Trade War whiplash is likely to continue.  However, in a longer-term view, the market is still bullish. 

Today is Friday. So don't forget to take profits in front of the weekend. Continue to lock-in gains, move stops, and trade your plan.  Keep in mind that a Trader’s job is to consistently make gains, not to hit home runs every once in a while.

Ed

Sorry, but no Swing Trade Ideas for your watchlist on Friday. However, if you're in the trading room at 9:10 am Eastern, we will cover some charts. 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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