Week-In-Review: Stocks Fall As US-China Trade Woes Intensify


Market Ends Week Lower As US-China Trade Woes Intensify

The market fell last week after tensions spread regarding the US-China trade talks. For the past few weeks, the market was very extended to the upside and due to pullback. The “news” that triggered the sharp pullback was the US-China trade tensions but that was just the latest headline du jour —and the important thing to keep in mind is that the market pulled back and has worked off its over bought conditions. If we get a deal, the market can easily rip higher. On the other hand, if we don’t, and the talks just somehow “stop,” then it will keep falling. The odds of the former happening are much greater than the latter so I am looking at this pullback as another buying opportunity, if the market bounces from here. The good news is that the bulls showed up and are doing their best to defend the 50 DMA line which is a healthy sign in the short-term.

Monday-Wednesday’s Action:

Over the weekend, Trump tweeted that he would raise tariffs and that spooked investors because it threatened the China trade talks. On Sunday night, futures plunged nearly 500 points and China’s stock market sank -3% on Monday. At Monday’s open, the market was down nearly 500 points and then spent the rest of the day recovering. The Russell 2000 ended higher on the day and the other popular averages ended with minimal losses. Stocks fell hard on Tuesday after U.S. Trade Representative Robert Lighthizer echoed Trump’s tweet and said the U.S. will increase tariffs on Chinese imports on Friday. That spooked the market and led many people to worry about the fall out to the global economy. Stocks opened lower on Wednesday but closed higher after China said it will take “necessary” countermeasures if US raises tariffs Friday. In other news, Uber priced its IPO toward the lower end of its target range. 

Thursday & Friday Action:

On Thursday, stocks fell hard after the open but recovered after President Trump said, “a deal with China is still possible, but tariffs are an ‘excellent’ alternative.” Trump said that Chinese President Xi Jinping “wrote me a beautiful letter, I just received it, and I’ll probably speak to him by phone.” That helped the market erase most of its earlier losses but investors were still concerned about what will happen on Friday. Stocks opened lower on Friday after the White House raised tariffs on China and the trade talks ended for the week without a deal. Stocks bounced after Trump said the talks will continue and Treasury Secretary Mnuchin said the talks were constructive. Separately, Uber finally started trading on the NYSE and the ride-hailing giant started trading near $45 which was in the lower end of its range. 

Market Outlook: Bullish Tailwind Continues

Stepping back, the market remains very strong after the Federal Reserve reversed its stance and moved back into the easy money camp. Near-term resistance is the record high while near-term support is March 2019’s low, the 200 DMA line and then 2018’s low. As always, keep your losses small and never argue with the tape.


Do You Know The Most Under-Valued Stocks In The Market?
 Our Members Do. Take a FREE TRIAL – CheapBargainStocks.com


Here are more articles you may like

Claim Your Free Guide Today

Give us your email and we will give you the tools to change your life. 


Learn about Early Entry Points & much more...

© ChartYourTrade | Contact us: website@chartyourtrade.com

Disclaimer: All communication from ChartYourTrade is general in nature and for educational and general informational purposes only. Under no circumstance should it be considered personalized investment advice. All our work is general in nature and not specific to any one person. All the information on this site and/or that originates from us, or any of our partners or affiliates, is for educational and informational purposes only and is NOT a recommendation to buy or sell anything. To avoid any conflicts of interest, we do not have a working relationship with any of the companies mentioned in our work. Furthermore, we may have a long, short, or no position in any, or all, of the names that appear in our work and they may change at any time without notice. Investing and trading in capital markets or using margin carries a high level of risk and may not be suitable for all investors. Leverage can work against you as well as for you. Before you decide to invest or trade in capital markets you should carefully consider your investment objectives, level of experience, and risk appetite, among other factors. The possibility exists that you could sustain a loss of some, all, or more of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with capital markets, investing/trading, and seek specific investment advice from an independent financial advisor and other professionals. Remember all the information we provide is for educational and general informational purposes only and is subject to change without notice.

Charts and Data are courtesy of MarketSmith Incorporated. Join MarketSmith here.

Terms of Service