Best of the Week
Most Popular
1. Dollargeddon - Gold Price to Soar Above $6,000 - P_Radomski_CFA
2.Is Gold Price On Verge Of A Bottom, See For Yourself - Chris_Vermeulen
3.Dow Stock Market Trend Forecast 2018 - Nadeem_Walayat
4.Gold Price to Plunge Below $1000 - Key Factors for Gold & Silver Investors - P_Radomski_CFA
5.Why The Uranium Price Must Go Up - Richard_Mills
6.Dow Stock Market Trend Forecast 2018 - Video - Nadeem_Walayat
7.Jim Rogers on Gold, Silver, Bitcoin and Blockchain’s “Spectacular Future” - GoldCore
8.More Signs That the Stock Market Will Rally Until 2019 - Troy_Bombardia
9.It's Time for A New Economic Strategy in Turkey - Steve_H_Hanke
10.Fiat Currency Inflation, And Collapse Insurance - Raymond_Matison
Last 7 days
Golden Sunsets in the Land of U.S. Dollar Hegemony - 20th Sep 18
5 Things to Keep in Mind When Buying a Luxury Car in Dubai - 20th Sep 18
Gold Price Seasonal Trend Analysis - Video - 20th Sep 18
The Stealth Reason Why the Stock Market Keeps On Rising - 20th Sep 18
Sheffield School Applications Crisis Eased by New Secondary Schools Places - 20th Sep 18
Precious Metals Sector: It’s 2013 All Over Again - 19th Sep 18
US Dollar Head & Shoulders Triggered. What's Next? - 19th Sep 18
Prepare for the Stock Market’s Volatility to Increase - 19th Sep 18
The Beginning of the End of the Dollar - 19th Sep 18
Land Rover Discovery Sport 'Approved Used' Bad Paint Job - Inchcape Chester - 19th Sep 18
Are Technology and FANG Stocks Bottoming? - 18th Sep 18
Predictive Trading Model Suggests Falling Stock Prices During US Elections - 18th Sep 18
Lehman Brothers Financial Collapse - Ten Years Later - 18th Sep 18
Financial Crisis Markets Reality Check Now in Progress - 18th Sep 18
Gold’s Ultimate Confirmation - 18th Sep 18
Omanization: a 20-year Process to Fight Volatile Oil Prices  - 18th Sep 18
Sheffield Best Secondary Schools Rankings and Trend Trajectory for Applications 2018 - 18th Sep 18
Gold / US Dollar Inverse Correlation - 17th Sep 18
The Apple Story - Trump Tariffs Penalize US Multinationals - 17th Sep 18
Wall Street Created Financial Crash Catastrophe Ten Years Later - 17th Sep 18
Trade Wars Are Going To Crash This Stock Market - 17th Sep 18
Why Is Apple Giving This Tiny Stock A $900 Million Opportunity? - 17th Sep 18
Financial Markets Macro/Micro View: Waves and Cycles - 17th Sep 18
Stock Market Bulls Prevail – for Now! - 17th Sep 18
GBPUSD Set to Explode Higher - 17th Sep 18
The China Threat - Global Crisis Hot Spots & Pressure Points - 17th Sep 18 - Jim_Willie_CB
Silver's Relationship with Gold Reaching Historical Extremes - 16th Sep 18
Emerging Markets to Follow and Those to Avoid - 16th Sep 18
Investing - Look at the Facts to Find the Truth - 16th Sep 18
Gold Stocks Forced Capitulation - 15th Sep 18
Hindenburg Omen & Consumer Confidence: More Signs of Stock Market Trouble in 2019 - 15th Sep 18
Trading The Global Future - Bad Consequences - 15th Sep 18
Central Banks Have Gone Rogue, Putting Us All at Risk - 15th Sep 18
Gold Price Seasonal Trend Analysis - 14th Sep 18
Growing Number of Small Businesses Opening – and Closing – In the UK - 14th Sep 18
Gold Price Trend Analysis - Video - 14th Sep 18
Esports Is Exploding—Here’s 3 Best Stocks to Profit From - 13th Sep 18
The Four Steel Men Behind Trump’s Trade War - 13th Sep 18
How Trump Tariffs Could Double America’s Trade Losses - 13th Sep 18
Next Financial Crisis Is Already Here! John Lewis 99% Profits CRASH - Retail Sector Collapse - 13th Sep 18
Trading Cryptocurrencies: To Win, You Must Know Where You're Wrong - 13th Sep 18
Gold, Silver, and USD Index - Three Important “Nothings” - 13th Sep 18
Precious Metals Sector On a Long-term SELL Signal - 13th Sep 18
Does Gambling Regulation Work - A Case Study - 13th Sep 18
The Ritual Burial of the US Constitution - 12th Sep 18
Stock Market Final Probe Higher ... Then the PANIC! - 12th Sep 18
Gold Nuggets And Silver Bullets - 12th Sep 18
Bitcoin Trading - SEC Strikes Again - 12th Sep 18

Market Oracle FREE Newsletter

Trading Any Market

Will The Trump Trade Tariffs Send The Stock Market Into A Tizzy?

Stock-Markets / Stock Markets 2018 Mar 05, 2018 - 09:35 AM GMT

By: Avi_Gilburt

Stock-Markets

Each week, I believe the silliness being espoused as to what moves the market reaches a climax. Yet, the following week somehow always proves me wrong.

Two weeks ago, I noted how the pundits claimed the market dropped because of rising rates, but when the market rallied, the same pundits claimed that it was rallying because of rising rates.


Around the same time, these same pundits told us that if the CPI would suggest inflation is rearing its ugly head, the market would continue to tank. So, the CPI showed signs of inflation, yet market held the support I noted to my subscribers to the penny, and rallied that day.

And, I have shown you many of such instances which evidence the over-simplification being presented to you about how our market works. The problem is that markets do not work in the same way as physics. Yet, too many try to present in a similar manner.

This past week truly provided us with another head scratcher, well, at least for those of who engage in independent thinking and care about the facts.

In the early part of the week, the market rallied towards the 2800 region target we set as our expectation before we turned down, as we called for it to do. In fact, the market struck 2789SPX, and then turned down for most of the rest of the week.

And, what was the reason you were told for the turn down? If you were listening to the news towards the end of the week, it was “clearly” due to Trump’s trade talk of tariffs on steel. In fact, consider how many articles you saw with a similar title to this one: “Trump Tariff Plan Rattles Markets.“

Makes sense, right? The only problem is that the market turned down two days before Trump spoke about his steel tariff. But, I am sure there will be some of you who point to Powell’s statement about inflation approaching his targets as the cause of the drop early in the week. Yet, we have evidence the prior week of the market rallying after evidence of inflation was presented in the economic data.

Moreover, Trump tweeted on Friday morning how he believed that a trade war would be good for the US, and what did the market do on Friday? It bottomed in the morning and rallied for the rest of the day. And, yes, I have heard numerous pundits point to the Trump tweet as the reason the market rallied on Friday.

In fact, one of my subscribers sent me this post they found on a blog because they know I would get a chuckle out of it:

“The market seems to be saying that import tariffs are a good thing for business. Only dumb money would believe that to be true so we know who is driving the rally.”

I think it would be more appropriate to state that only dumb money would believe that the tariffs actually were the cause for the market moves this past week. And, the only way they can come up with such a ridiculous statement is based upon convoluted "logic."

Are you starting to see my point yet? Listening to or reading any analysis about the market which is based upon attempted correlations centered around the news of the day is the most ridiculous thing an investor can do. Yet, almost all of you read this stuff day in and day out thinking you can use it to outperform the market.

Actually, I stand corrected. Making a decision based upon attempted correlations centered around the news of the day is the most ridiculous thing an investor can do. And, if you attempt to do so, you will likely be broke quite quickly.

I want you to consider one last thing when pondering the usefulness of news: Why are the reasons for the markets move always being presented after the fact, and even then there is not often consensus?

People are trying to explain why the market moved after the fact, and often present conflicting ideas from that which they claimed moved the market the prior week (see the CNBC example above). Have any of them figured out how to tell us what the market will do before it happens with any reasonable amount of accuracy?

Last week, we noted that as long as we do not break below 2730SPX, the market was going to rally up towards the 2800 region before it turned down again. On Tuesday morning, the SPX struck 2789, and turned down over 140 points. And, the probabilities at this time suggest we are not likely done with the downside.

While I am not going to go into the details and charts that I provide to my subscribers, I will simply explain that we can see further upside action early in the coming week. But, as long as we remain below last week’s high, the market has a set up in place to retest the 2530 region, with strong potential to break down towards the low 2400 region before this correction runs its course. For now, 2600-2630SPX is going to be the support you need to watch should we see another downside follow through in the coming week.

Of course, I can always be wrong in my assessment. For this reason, I provide specific markers so you can know that my primary expectation is wrong. So, alternatively, if we see an impulsive 5-wave structure through the high made last week, that would be a strong suggestion that we are heading up to our next higher target of 3011-3223SPX earlier than I had initially expected. But, for now, I have to view this more immediate bullish potential as being a lower probability.

Avi Gilburt is a widely followed Elliott Wave technical analyst and author of ElliottWaveTrader.net (www.elliottwavetrader.net), a live Trading Room featuring his intraday market analysis (including emini S&P 500, metals, oil, USD & VXX), interactive member-analyst forum, and detailed library of Elliott Wave education.

© 2018 Copyright Avi Gilburt - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2018 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules