MC Trading

Today, the US increased tariffs on $200B of Chinese goods as the US/China trade deal breaks down.  China has vowed to retaliate for the move.  The past week has seen the global markets shocked by two items: Iran sanctions and US/China trade breakdown.  The markets had been expecting a US/China trade deal to be reached and optimism was quite high – hence the rally in the Chinese stock market and the rally in the US stock market.  What next?

Well, we believe this news, as well as future news that will likely hit the markets over the next 3+ months, will continue to prompt the Shake-Out we have been warning about.  Depending on how severe these news events are, the rotation in the markets could be quite severe as well.

Our recent analysis suggests that recent lows in the US stock market may be near-term support and that the US stock market may attempt to form a bottom near these lows.  Our research shows the Transportation Index is leading this move.  We believe the ORANGE Moving Average level, as well as the RED and GREY Fibonacci projection points, will act as a temporary price floor this week and next.

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