Market Update: Trade Woes Hurt Stocks
Once again, stock futures are down sharply before the open as trade woes continue to pressure Wall Street. I want to take a second to explain this whole tariff situation because I’ve been receiving quite a few questions about it in recent weeks: Put simply, China has more to lose than the U.S and here’s why:
A Closer Look At Trade:
Overnight, President Trump said he’s ready to announce tariffs on $200B worth of Chinese goods. It is not that big of a deal for the US economy. The US economy is roughly $19T and currently, China only imports $130B of goods from the US so its response clearly will be somewhat limited from a tariff standpoint. Separately, the US imports 505B from China. Could they do other things to retaliate? Sure. But even if they stop trade altogether (which will not happen) $130B barely moves the needle for the US economy. So China clearly has more to lose than the US. Now, the ball is in China’s court. That’s why Asian markets are down so much more than the US right now.
Market Update:
Latest headlines aside, the last few times we have experienced a sharp pre-market sell-off the bulls showed up in the normal session and quelled the bearish pressure. If that happens again- that will be a big positive/bullish sign. Conversely, if sellers gain control- the market could easily pullback from here as the market is overdue for a nice/steep pullback.
Right now – a defensive stance is important as patience is required to see how this plays out. I’m still of the mindset we head higher longer-term, notwithstanding, a few sharp pullbacks along the way. Remember, end of month and end of quarter are right around the corner which usually has a positive bias. The next level of support to watch for the Dow and S&P 500 is the 50 DMA line. It would be a classic case to see those indices pullback then bounce off that important level.
FLS Portfolio:
The FLS portfolio continues acting very well. To protect our positions, all stops are/have been moved up to at least breakeven. ANET and EL stops are moved up to breakeven today. Here is a snapshot as of Monday’s close:
Positions:
- The service owns:
ADBE +130.16%, ISRG +55.63%, SFLY +4.52%,
QQQ +7.16%, NFLX +21.59%, SQ +32.14%, ANET +6.13%, EL +3.45%
- The service will exit:
ADBE @ 201.56, ISRG @ 379.77, SFLY @ 90.87,
QQQ @164.71, NFLX @ 321.09, SQ @ 50.10, ANET @ 263.09,
EL @151.81
Working Order
There are no new working orders
Disclaimer:
This analysis contains information from resources believed to be reliable but are not guaranteed as to accuracy or wholeness as of the date of this publication. Past performance is not necessarily indicative of future results. There is always a risk of loss in trading and investing. Opinions articulated are subject to change without notice. This analysis and any opinions expressed are intended for educational purposes only and should NOT BE interpreted as a call for engagement in any transaction involving the purchase or sale of any security or investment product or service. The risk of loss in investing and or trading can be substantial, and traders/investors should carefully consider the inherent risks of such an investment in light of their financial condition. The author, firm, associates, or the firm’s clients may have a position in any of the investments mentioned and their positions are subject to change without notice. Any reproduction or retransmission of any portion of this report without the express written consent of 50 Park Investments is strictly prohibited.
