Traders Don’t Believe Trump Will Start Trade War – Focus Is On Q2 Profits
Posted by Pete Stolcers on July 3
The market has absorbed negative trade war news and buyers are scooping stocks every time the SPY tests the 100-day moving average. Stocks rallied off of support yesterday and the reversal is spilling over this morning. The S&P 500 is up 12 points before the open.
Trump is battling with all of our trading partners and investors are discounting the threat of a trade war. They know he needs to maintain his popularity into the November mid-terms and a market correction would destroy his momentum. If trade talks with China resume, the market will make a new all-time high. He should focus on a deal with our largest trading partner.
Economic releases will be strong this week and it will take some of the focus off of tariffs. ISM manufacturing came in at a very robust 60.2 yesterday. I’m expecting a strong jobs report on Friday.
Earnings season will begin next week. Record profits and strong guidance will attract buyers.
Swing traders are long IWM calls at the $166 level and we will hold them without a stop. The next two weeks will be choppy and then I am expecting a nice push higher. The Russell 2000 paid a quarterly dividend today and it should perform well relative to other indices from this point forward.
Day traders should let the dust settle. I don’t trust these opening gaps higher. If the gains hold after 30 minutes you can start buying. Holidays have a bullish bias and stocks should grind higher. Use the first hour range as your guide and favor tech stocks when you are trading from the long side. Industrials have been relatively weak and that is where you can find the best shorts.
Trump’s deadline for steel and aluminum tariffs on Chinese imports goes into effect Friday. This event does pose a threat and we will see if the market is able to shoulder the news.
Be safe as you celebrate the birth of our great nation. Happy Fourth of July!
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