Trade War Games

It's Showtime!  At midnight tonight....  Who will reign supreme in the Trade War Kitchen!  Of course, unlike Iron Chef contests, there is no winner with these Trade War Games, only sour lemons.    Three courses of  Tariff and Trade War non-sense is far too much.   How much longer can we endure?  And even more importantly for us, how is the market going to react to tonight's Tariffs and the ensuing Tariff Game?  Just a few weeks ago the market fell over 2% after 'escalating' trade drama:

Trade Tiff Trauma Tantrum Tariff Tension Trade War

Today the market rallied despite tonight's Tariff deadline and the looming Friday non-farm payroll report.    If this Tariff non-sense is all over the news, in my opinion, the market has already priced it in.   Just like last year when North Korean Missiles were flying over Japan.  Why didn't futures crumble? It was already priced it.  Imagine that.  The market knew Trump and Kim were going to meet long before any of us did.

With the Nasdaq a few % points away from new record highs and the S&P500  not far behind, despite all this trade  war tariff non-sense, I think the risk isn't for a sharp move lower.  We've already seen that.  This risk is a sharp move higher.

From my perspective there is a nice long set-up on $IWM $SPY and $QQQ.   The $DIA, that track the DOW Jones Industrials, are right on the cusp of getting a trigger.

These momentum shifts have worked out rather well over the years.  Each of the momentum shifts the last two years have resulted in strong moves.  Here is what I see for the $SPY, $QQQ, and $IWM.  And to be clear, usually they will trigger within days or even a week apart.  To see them all trigger so close together, I think it just gives me a little more confidence that the Trade War non-sense is going to be another named buying opportunity for the stock market.

$QQQ has found strong support at $170.  Momentum has begun to turn and we could see a fresh record high into August.

$IWM broke back over support/resistance from 2008.   $IWM continues to breakout in 2018 with another  $170 test and break likely in the short term.

The VIX closed today under 15.00.   The set-up remains for a break lower.  The action has been stubborn as it was a few months ago.  The resolution, however should also be the same.

and the VXX also setting up with price action failing to break above resistance.

While the charts are turning, the stock market pundits are worried about a recession and the yield curve:

Indeed worry is good.  There has always been worry in this market since the March 2009 lows.  And each of those specific worries end up going away and being replaced with another worry and higher stock prices.  Worry away, please.

.....And lets forget about today, tomorrow or next week, Marketwatch's most read article tonight  is saying prepare for a lost decade!   And I thought a few weeks of sideways chop for the S&P500 sucked!

Kind of like when they said to prepare for a 50% market crash in 2016....

A lost decade!!  I'd have put a gps tracker on it if it was my decade...

Who knows.   Maybe it will be a lost decade.  Maybe this is just the beginning of a trade war and today... yes today... the stock market traded higher than we will ever see it again in our lifetime.  Maybe North Korea was just bluffing with Trump and they are making more nuclear weapons as we speak..or read... or watch Netflix.  Maybe today's positive momentum price triggers are just a giant rope a dope, and price action is really going to head south soon.

Yes I've seen that thrown about as well:

From my perspective though, momentum has begun to turn and price action is going to move higher, not lower, trade war or not.

....And this next decade is going to be phenomenal, so be sure not to lose it.


Known to most as Uranium Pinto Beans, Jason has more than 15 years under his belt of trading stocks, options and currencies. His expertise primarily lies in chart analysis, and he has a strong eye for undervalued stock. Because he’s got the ability to identify great risk/reward trades he usually enjoys taking the path less traveled and reaping the benefits from the adventure.

He is a co-founder of Option Millionaires, and he is best known for his weekly webinars with Scott, as well as his high level training webinars and charts found in the forums.

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