More Trade War Give & Take

Stocks suffered large gaps lower across the board Tuesday as President Trump threatened new tariffs (France, Italy, Turkey, Austria) and acknowledged that there may be no China trade deal prior to the 2020 Election.  Then mid-day the White House acknowledged that the President plans on moving ahead with more China tariffs on Dec. 15th.  However, after some follow-through in the morning, the rest of the day was still spent slowly grinding back to above flat after the gap down.  Meanwhile, the VXX ended up 5.80%.

The SPY ended down 0.67%, the DIA down 0.97% and the QQQ down 0.78%.  This made for the third straight down day (including the short session Friday).  In and of itself, this is causing fear and talk of a repeat of 2018’s December selloff.  However, to put this 3-day slide in perspective, we are only 1.5 to 2 percent off the all-time highs.  So, we are not exactly seeing the end of the world yet. 

After hours, the Co-CEOs of Alphabet (Larry Page and Sergey Brin) stepped down and appointed Google CEO Sundar Pichai as their replacement.  Pichai is an Engineer by trade and more of an operations guy than Page or Brin.  He was a driving force behind Google moving into non-search projects such as self-driving cars, artificial intelligence, rural internet, and others.

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Despite the President's Tweets and words yesterday, Bloomberg reports that the US and China are inching closer to an agreement on the number of tariff rollbacks that would be acceptable for a "phase one partial deal." American sources say they expect the arrangement to be agreed prior to 12/15 (also forestalling another round of tit-for-tat tariffs). However, there is no word on when such an agreement would actually be signed. This story smacks of being another back and forth dueling false rumor around the China Trade War. Nonetheless, stocks are seeming to react very positively to the news.

Overnight, Asian markets were again in the red.  In Europe, the major markets are all in the green at this point.  As of 7:30 am, U.S. futures are all pointing to a half percent gap higher on the trade deal rumor.

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In other trade news overnight, France and the EU have said they will retaliate over US-threatened tariffs on French goods. In addition, French President Macron, UK PM Johnson and Canadian PM Trudeau were caught on a "hot mic" joking about President Trump. (And we all know how well he can take a joke...so expect more on this front.)

With an apparent attempt at a rebound in the cards this morning, don't start chasing. Keep in mind that to be successful, a trader must follow their rules...not get caught up in Fear of Missing Out. So, stick to your plan, lock-in profits along the way, move your stops, and maintain your discipline.  Remember that your job is to be prepared, make consistent gains and reduce risk, not to hit home runs every once in a while.

Ed

Swing Trade Ideas for your watchlist and consideration. TTWO, DXC, ALXN, EA, ECL, WBA, ARMK, KLAC. 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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