Markets gapped slightly (+0.10%) and then rallied early, maxing out about half a percent above the Monday close.  However, the bulls faltered at that level and traded back lower leaving upper wicks.  Nonetheless, the SPY, DIA, and QQQ all managed to close the day Tuesday at new all-time high closes…but on candles that were very indecisive.

Among the news drivers Tuesday was a mid-day speech by the President.  Market Analysts had hoped it would be a positive speech on trade and China negotiation success.  Others had expected an announcement of another postponement of European Auto tariffs.  (Wed. is the deadline for another postponement, and this being an economic and trade speech the announcement was expected.) 

However, instead, President Trump took the opportunity to say the Fed has been holding the US economy back.  He also again said China had been cheating the US for decades (and that the prior US Presidents must not have understood trade).  And while he said a phase-one deal with China was now “close,” he went on to threaten substantial increases in tariffs if no deal is reached.  (Rather than being “a done deal” as he has said in the past, this posturing clearly indicates negotiations are still underway.)  Finally, he also failed to mention the postponing of the tariffs on European Automobiles.  This was decidedly NOT the kind of speech markets had hoped to hear.

Beyond the speech, the President also threatened the World Trade Organization on Tuesday.  (Bloomberg reports say he is threatening to block the WTO budget approval, which requires unanimous consent by member states, unless the WTO falls in-line with his views on trade.)   So, all in all, this was a bad day for anyone with any concerns about International Trade.

In addition to the US Market pullback, overnight Asian markets were all in the red.  In Europe, markets are also all strongly down at this point.  As of 7:30 am, U.S. futures were on track for a 0.3% to 0.4% percent gap lower across the board.

Wednesday’s economic news includes CPI (8:30 am) and Fed Chair Powell testifies before Congress at 11 am.  The only major earnings events will take place after the close as CSCO, NTAP, and TCOM all report.

Fed Chairman Powell’s testimony is very likely to be the large market-driver today.  However, Impeachment testimony (and off-setting events designed to distract) will also fill the news.  Regardless of any shock markets may get, remember 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. 

Ed

Swing-Trade Trade ideas for your consideration. Long – CARS, KHC, ARNC, CDW, MAS, K, DOV, PNR, AMD, FBHS, VLO, AMP, UTX, MS, KEY. Short – ETR, SO, CINF, STZ, CTAS, DG, TGT, CPB. 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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