S&P Breaks With A Tariff Tweet

After a nice morning bounce from yesterday’s Fed sell-off, the market got slapped in the face with some real fundamental news with President Trump’s tweet threatening to raise tariffs.   Not a done deal yet but can’t see President Xi scrambling to make concessions to make Trump look like a winner as Mexico did, or Trump said Mexico did.

In fact, the Chinese may look to the Mexico example as another instance of Trump not following through on his threats, which makes negotiations even more unstable.  An escalation of the trade war with additional tariffs will do real damage to the global economy.   Nobody wins a trade war.

Hey,  but Trump is standing up to China, right?  How idiotic.

Key Levels

The S&P closed at 2953.56, just through the bottom of the “breakout zone” of 2954-2964, which brings the 50-day moving average in play at 2926.06.

The S&P must hold the 2867-2889 level, which is huge support coinciding with the first Fibo and 200-day moving average, respectively.   We think that is where the index is heading probably after the strum und drang of tomorrow’s employment report.

To the upside, first takeout 2964, the top of the “break-out zone” and then eyes on the 20-day at 2996.78.  Not achievable, in our opinion,  unless Trump tweets “April Fools” tonight.

Looks like a lot August holidays are going ruined with this new round of escalation in the trade war.

Better sellers.