President: More Tariffs, Need Neg. Rates and Weak Dollar

After the Thanksgiving holiday, stocks spent the half-day Friday grinding a bit lower.  The SPY and DIA closed down about 0.35%, while the QQQ closed just under half a percent in the red.  This leaves markets very near the all-time highs and still a bit extended from both the T-line and 50sma.  However, T2122 has fallen back into its mid-range.  So, we are at these highs on less participation recently.  Meanwhile, the VXX continues to show very little fear in the market.

In economic news, “Black Friday” was a rousing success as US shoppers spent a record amount for that day ($7.4 billion).  Top Retail analysts are also predicting an even bigger “Cyber Monday” (with sales of $9.4 billion forecast).  However, even though these are record sales in the US, we should keep this in perspective.  Earlier in the month, BABA alone pulled in $38 billion of sales on “Singles Day” (their self-invented Anti-Valentine’s Day)…and that's just one Chinese online retailer.

Related to the Trade War, the official paper of the Chinese Communist Party posted a tweet on Saturday.  The tweet said that a US Pledge to scrap new tariffs (12/15) is not an acceptable replacement for rolling back existing tariffs.  In addition, China has suspended US military “Port Visits” to Hong Kong and placed sanctions on US-based NGOs.  (Over American Pro-Hong Kong Freedom legislation.) Not to be outdone, President Trump took to twitter again late-night placing tariffs on South American Steel and Aluminum, as well as criticizing the US Fed again and demanding that they abandon decades of pro-trade strategy to lower rates and devalue the dollar.  (The King of Debt loves him some negative rates and cheap dollars.)

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In other political news, CNBC reported over the weekend that President Trump is again working with Capitol Hill Republicans toward another Tax Cut bill.  The aim of this new tax cut would be reducing the 22% top individual rate down to 15%.  There was no mention at all, not a peep, about any corresponding spending cuts.  Apparently, deficits aren’t a real thing in an election year.  In addition, other tax brackets were not being addressed at this point.  Even so, analysts say this would result in roughly $800 billion in tax reductions by 2025.

Major economic news for Monday is limited to Nov. ISM Mfg. PMI (10 am).  In fact, this will be a light week for economic news until Friday.  The same is true of earnings, with no earnings of note Monday and only a handful the rest of the week.

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

Traders should all be back after an extended weekend break.  Typically, coming back off a holiday leads to some selling.  However, the bulls have been running hard in November, Black Friday had record sales and there is no scheduled Earnings or Economic News to bring things down.  So, the bulls may well be ready to resume their run.   

Either way, remember we are swing traders.  So, continue to lock-in profits, move stops, and trade your plan.  Remember that your job is to 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. Long – NRG, APH, WFC, GILD, AES, DHI, CNC, KLAC, ENTG, MTZ. 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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