Trade War Leads Agenda

In spite of LOW and TGT both reporting beats (and guidance raises) before the bell, US Markets all gapped lower Wednesday on trade fears based on China’s anger over the US Senate passing a Hong Kong Democracy Bill.  After the Open, we ground sideways the rest of the morning.  However, just before 1 pm, word came from White House sources that a phase one of any trade deal is not expected to be completed in 2019.  This caused an immediate and dramatic sell-off for the next half hour.  

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After that early-afternoon selloff, the remainder of the day was spent recovering from this over-reaction.  By day end, we closed with indecisive, black candles across the board.  The SPY and DIA both finished down about 0.4% and the QQQ down 0.6%.  However, all indices remained in their range for the week and we needed a bit of a rest to relieve over-extension anyway. So, the down day was not necessarily a bad thing overall.

Thursday's major economic news includes Weekly Jobless Claims and Philly Fed Mfg. Index (both at 8:30 am) and Oct. Home Sales (10 am).  There are also a couple of Fed speakers, but they should not move markets.   The only major earnings before the bell today are for M (which posted a miss on sales and lowered forward guidance).  In addition, Impeachment Hearings resume at 9 am.

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Overnight, Asian markets were all in the red.  In Europe, markets are almost all in the red as well at this point.  As of 7:30 am, U.S. futures are just on the red side of flat across the board.  However, as is usual lately after the Wed. afternoon bad news about the Trade War, last night the opposite implication comes from China. It is being reported that China has invited the US negotiators to Beijing for another round of talks. (This China Trade War debacle is the very definition of ping-pong diplomacy.)

While Impeachment Hearings continue Thursday, the case has either already been made or was never going to be made (depending on your political point of view).  Either way, that circus will wind down soon with an Impeachment vote. However, the China Trade War story is very likely to drag on for some time.

Remember that the bulls remain strong and resilient.  So, be careful over-reacting to any temporary shock news.  Continue to take profits, move stops, and trade your plan.  Keep in mind that a Trader’s job is to consistently work their process to make gains...not to hit home runs every once in a while.

Ed

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