Stock Traders Defensive Ahead of China Trade Talks

Stock Traders Defensive Ahead of China Trade Talks


The Big Q: Is China getting ‘cold feet’ on trade resolution?

The Big A: President Trump knows that to get this deal done, to get China to end some of the trade abuses that have been occurring, he has to take a hard line. That is what he is doing and likely it will have the desired effect.

President Trump said the US will raise tariffs on $200-B worth of Chinese-made goods, from 10% to 25%, on Friday at 12:01a after accusing China of waffling on its promises.

Meanwhile, Tuesday, trading was largely defensive, evidenced by a flight-to-safety in US Treasuries, firmness in the USD, and a spike in the CBOE Volatility Index (VXX) (VIX 20.94, +5.50, +35.1%). The move in the VIX reflected interest in hedging against further Southside action.

Unlike Monday there was little effort to buy the dip, which helped exacerbate selling interest throughout the day.

All 11 S&P 500 sectors finished in the Red, as investors also sought to de-risk after a strong YTD run up with an understanding that a meaningful trade resolution may take longer than expected, and 9 of the 11 sectors finished with losses of at least 1.0%.

Tuesday, the major US stock market indexes finished at: DJIA -473.39 at 25965.09, NAS Comp -159.53 at 7963.74, S&P 500 -48.42 at 2884.05

Volume: Trade on the NYSE came in at 923-M/shares exchanged

  • NAS Comp +20.0% YTD
  • Russell 2000 +17.3% YTD
  • S&P 500 +15.1% YTD
  • DJIA +11.3% YTD

HeffX-LTN’s overall technical out look for the major US stock market indexes is Bullish in here.

Stay tuned…

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Paul Ebeling

Paul A. Ebeling, polymath, excels in diverse fields of knowledge. Pattern Recognition Analyst in Equities, Commodities and Foreign Exchange and author of “The Red Roadmaster’s Technical Report” on the US Major Market Indices™, a highly regarded, weekly financial market letter, he is also a philosopher, issuing insights on a wide range of subjects to a following of over 250,000 cohorts. An international audience of opinion makers, business leaders, and global organizations recognizes Ebeling as an expert.

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