Potential Trade War Resolution? How Will Stocks React?

The stock market traded higher after positive reports of the US and China coming to the table in ongoing trade talks. Now what? Click the link above for my take.

The sensitivity of the stock market to the trade war with China has been on the extreme end of the spectrum, with the slightest flicker of news causing the S&P to jump (or fall) 15 points in a matter of minutes.

You have have heard me say this before, but I equate the current market movement to the way my six year old acts when he’s been up two hours past his bedtime. His emotions are heightened, as if he’s on high alert. Everything MAY go his way, but heaven forbid he can’t find his favorite Minecraft pajamas or he doesn’t like the flavor of tooth paste I got him. The explosion of emotions that follows is something the neighbors down the block will consider knocking on our door to check and see if everything is alright.

The same goes for the stock market and the trade war. Any tiny piece of news is going to send this stock market rocking. Now, I’d prefer it be in the direction of the trend – to the upside – but, I always have to remember, the market does not care what I want. And, in all reality, it doesn’t matter. It just matters that we quantify the direction, and trade it.

Currently, we are stuck at a key line in the sand at $2950 in the S&P, and failing at that level (after a midday jolt of hope that sent us to $2959 but quickly faded).

So, what is my plan?

Well, we cannot ‘plan’ for news. We have no idea what President Trump is going to do, what China will agree to, etc. However, we have our technicals, we are aware of the situation, and will act as necessary when the move happens. I’m looking for either a significant upside break on positive news that will cause a rally in tech, semiconductors and discretionary into earnings, or a failure that will take the weakest links (the Russell, energy, financials, transports) lower.

For right now, I am keeping my risk in check, focusing on relative strength names to the upside and laggards to the downside – with very short leashes. I want to keep cash ready for when I know it’s time to strike. That time hasn’t shown up, yet – but it will.

Want more information? Follow me here by signing up for my free newsletter, at www.fivestartrader.com, or in my Mastery program which you can find at www.simplertrading.com/profits. You can also follow me on Instagram or on Twitter @traderdanielle.

 

Leave a Comment

Up Next...

Using Butterflies to Short Stocks

Market Volatility Market volatility has picked up, meaning there are more downside opportunities than before. When the market starts pulling back, I always try to quantify if it’s a normal “buy the dip” opportunity or if it’s a little bit deeper of a move that means it’s time to short some stocks. Identifying Bearish Alignment … Read more

Read More

Critical Stock Market Red Flags

With earnings season just beginning, we are entering the most risky time frame for the stock market. Netflix earnings week is already kicking off with a bang. The Nasdaq sold off yesterday, ending the day down -1.67%, with critical stocks like Tesla down -5.59%, Microsoft down -1.97%, and Meta down -2.28%. This occurred after escalating … Read more

Read More

Using Conservative Sell Signals To Exit

Hey traders! In this week’s trade review video, I discuss the conservative signals I had that caused me to take a cautious profit on Amazon. Sometimes I’ll take conservative profits, especially in a case like before CPI data when a news-related event is upcoming. Now, of course, if you take conservative profits, you cannot capitalize … Read more

Read More

Subscribe Today!

Want my up-to-date analysis, setups, top trading tips, and more? Be a Five Star trader, and join my free newsletter today!

Sign Up Now
all-as-seen-on-logos