Buy the Dip or Something Different?

We ended last week with a positive risk sentiment across the board. The start of this week feels a bit different.

Weaker factory numbers than expected in the U.S, an impeachment process that is moving to the next level in the U.S., rumblings that China wont step in with expansionary measures to help their economy and President Trump, seemingly struggling to achieve a phase 1 deal with China, decided to go after Brazil and Argentina. https://www.bbc.com/news/business-50633500

Rounding out the day with a go at France!  https://www.axios.com/trump-tariffs-france-760839cf-9e4e-4f50-bcd7-8dc0a9732669.html

It seems that President Trump told reporters in London that there was no deadline for a deal with China and likes the idea of waiting until after the election for a China deal. https://www.cnbc.com/2019/12/03/trump-says-it-might-be-better-to-wait-until-after-2020-election-for-a-china-deal.html

Not to mention that president Trump continues to attack the Fed for not being aggressive enough on rate cuts even though they have cut .75% and are pumping liquidity into the system at an impressive rate. https://www.federalreserve.gov/monetarypolicy/bst_recenttrends.htm

The markets are not taking the past couple of days events too poorly, but the markets have been quite spoiled the past months and not used to seeing the global equity markets retrace for more than short periods of time. Should the market continue to be weak into the Friday employment numbers, we could be in for an interesting end of the week.

The S&P 500 is ticking lower on the lack of trade clarity and increased uncertainty.  Year end profit taking starting early? Or?

Gold starting to show some life, having held the key $1,450 level last week. Should equities continue weaker, we expect gold to test the important $1,480 level.

(We are a bit surprised that gold is already testing the resistance level …)

The VIX index is grinding higher having held above the key 12.50/13.0 level!

The iShares IBOXX U.S. High yield bond Fund is holding an important support area. A break will convince us that equities have more work to do on the down side.

Contact us if you are interested in receiving real time trading signals. In doubt? Check out our track record below!

TickerDate OpenedEntry PriceStopTarget PriceCurrent Price% Change
Long NOKIA2019/10/303.202.804.003.1585-1.30%

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– Mark W

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