Friday’s market sell-off can be attributed to the trade escalations with the US and Chinese governments. We continue to see both countries raise tariffs on each other’s goods. Sellers were able to really push the envelope on Friday sending the broader market lower. Russell 2000 led the entire market lower ending the day down 3.09% followed by the NASDAQ at 3%. Transportation stocks dropped 3.3%. The yield curve still is flirting with inversion as this trade dispute lingering on without an end in sight. If we do get a deal it will be something to watch out for as we proceed in to the 4th quarter. Futures are indicating a rebound this morning as headlines indicating talks will restart between the two economic powerhouses. We are still on very shaky ground and anything is possible. Stay disciplined in this volatile market.
Will or will they not come to a trade agreement is this question at hand. While we would love to be able to answer this question the market will do what it needs to do regardless of what we think. You would think that both countries would come to agreement at some point if just to stabilize equity markets. Tough to head into an election year in a recession and depressed stock market. While the Chinese do not have to worry about an election certainly a weak stock market would force their hands. Also, the riots continuing in Hong Kong are certainly worrisome for the country. Geopolitics never seem to be in a great place, and we are seeing this continue.
Monday’s trading session will be interesting to see all unfold. Will we see these morning gains evaporate? Or will buyers step up and support this gap higher. Neither would surprise us, but the price action last week suggests prices have a bit further to go on the downside before we resume any sustainable move higher. Given we are still in a seasonably weak period anything is possible. Keep your head on a swivel and remain disciplined. This is not the time to be a hero!
We hope you have a tremendous week of trading.
