It has been a very busy time in D.C. In the last few weeks, Trump placed tariffs on Steel and Aluminium, said he may hit China with tariffs, then replaced his: Chief Economic Advisor, The Secretary Of State, The Head of the CIA, and his National Security Advisor might be next. If that wasn’t enough, the government placed sanctions on Russia for meddling with the 2016 election, and Special Counsel Robert Mueller subpoenaed the Trump Organization for his investigation (I might be missing a few headlines). Normally, one would expect the stock market to be down considerably on just anyone of those headlines. Instead, stocks are barely budging. Instead, all the major indices are trading just below their record highs. That, ladies and gentlemen, is a very strong sign that the bulls are still in control of this market. Remember, it is not the news that matters, but how the market reacts to the news. The market only needs one or two big up days and we will be trading at new all time highs again. Stepping back, the next big important levels to watch are 2018’s high (resistance) for the major indices and February’s low (support) for the market. Until either level is broken, by definition, I have to expect this sloppy sideways choppy action to continue.
Thur & Fri Action:
On Thursday, stocks ended mixed as investors digested a busy day of data. In the morning, the White House said it was thinking about implementing tariffs on at least $30 billion of Chinese imports. Separately, the Treasury Department said it will issue sanctions again Russia for interfering with the 2016 elections. Then, The New York Times reported that special counsel Robert Mueller subpoenaed Trump’s businesses and the Trump Organization which put downward pressure on stocks. On a somewhat bullish note, despite all these negative headlines, the Dow rallied over 100 points and he Nasdaq and S&P 500 ended with very modest losses. Stocks were relatively quiet on Friday as investors digested a busy week.
Market Outlook: Chop City
The market is trading between important resistance (2018’s high) and important support (February’s low). Until either level is broken, I have to expect this sloppy, sideways action to continue. The big level of support to watch is February’s low and then the 200 DMA line for the major indices. For now, as long as those levels hold, the longer-term uptrend remains intact. As always, keep your losses small and never argue with the tape. Want 1-0n-1 Coaching Lessons From Adam? Click Here To Learn More