For those of us who’ve been wrapped up over the last few days (work and personal issues for me) this morning presents an opportunity to get up to speed on the twitterized hype machine.
First was good old Larry…
…err, that is, Larry…
This is Kudlow in full frontal economic tout regalia with only the words “King Dollar” missing from this vintage cheer leading, yesteryear style.
We're killing it on the economy! 🔥 pic.twitter.com/hme0eihP9c
— The White House (@WhiteHouse) May 3, 2019
And then the tweets heard round the investing world. Amid the robo/rage tweeting about collusion and coups, cheer leading the economy, and campaigning the coming election…
….of additional goods sent to us by China remain untaxed, but will be shortly, at a rate of 25%. The Tariffs paid to the USA have had little impact on product cost, mostly borne by China. The Trade Deal with China continues, but too slowly, as they attempt to renegotiate. No!
— Donald J. Trump (@realDonaldTrump) May 5, 2019
The United States has been losing, for many years, 600 to 800 Billion Dollars a year on Trade. With China we lose 500 Billion Dollars. Sorry, we’re not going to be doing that anymore!
— Donald J. Trump (@realDonaldTrump) May 6, 2019
Look, the guy is committed. He’s a blunt tool to the point of being a bull in a China shop. He is doing what he is meant to do.
But with the stock market down a not so alarming 1.9% (roughly) this morning we realize a couple of things…
- These shock events that hit the media and knee jerk man & machine into sell mode rarely do much beyond the jerking of the knees.
- A protracted trade battle did wear on man’s nerves and trip machines’ algos in Q4 2018, to the tune of a significant market correction.
So where does that leave us? Well, as NFTRH has been tracking over the last couple of weeks, as the SPX goes about its top-test the VIX has not been pinned completely to the mat.
Indeed, VIX has been sporting a divergence to Inverse SPX not unlike a couple of divergences that preceded a couple of recent market events you may remember.
VIX is gaining some news in the media this morning, itself. In fact, here is the VIX gaining a juicy headline at MarketWatch.
Personally, I’d like to see it just prove a knee jerk itself so it can continue to build out a better bearish divergence to the stock market and because I am not well positioned for a bear phase aside from my largest position, which is a very red and stubbornly held short against SPY. But last I checked, what I’d like to see is not a priority for the market.
To wrap up this post, these news-driven spikes (up or down) in markets usually do not last. They kick the more skittish casino patrons to the curb for a day or two and then proceed on with business. In this case that business was/is a top-test for SPX. We have an upside to 3000 +/- per the Reverse Symmetrical Triangle if the test succeeds.
That is a potential bull trap scenario as the media would swing to BREAKOUT! & MELT UP! headlines, FOMO’ing the holdouts into what could be the top.
Yet SPX has not even passed the current top-test (it would follow its leaders, SOX & NDX in the SOX>NDX>SPX leadership chain). But with the memory that the Q4 2018 Trade War dispute, and the real fundamentals it holds in the balance, we can watch today’s RED headlines along with market technicals this week to decide whether this is a knee jerk prior to a ‘turnaround Tuesday’ (or Wednesday) or something more virulent.
The market was and is at very high risk, after all. Here is but one picture of that from Sentimentrader, by way of NFTRH 550.
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