Delay in signing...
The announcement that there may be a delay in the US/China signing. What was expected to be signed in November initially, COULD BE been pushed to December according to senior White House official. There are two reasons given:
- Terms, and
- Venue
Blaming a venue for a delay is a bit of a smoke screen that masks reason #1....the terms. If the venue is a smoke screen, is there more smoke from the "terms". Also, you have to wonder where there is smoke, is there fire.
Time will tell, but remember, Phase I is supposed to be the easy one. It does not address the so-called seven deadly sins including:
- Stop stealing our intellectual property,
- Stop forcing technology transfers,
- Stop hacking our computers,
- Stop dumping into our markets and putting our companies out of business,
- Stop state-owned enterprises from heavy subsidies,
- Stop the flooding of fentanyl in the US, and
- Stop the currency manipulation
Reports are that China wants previously imposed tariffs on China goods rolled back (not just the planned increases stopped). Does Pres. Trump want to give that up this early in the negotiations that honestly are not far off the ground?
The problem for the stock market is that the major indices made new all time highs this week. So in addition to the uncertainty from US/China, there is the "we are at all-time highs" fear.
What would tilt the bias more to the downside technically?
Looking at the Nasdaq, the 50 hour MA and trend line support comes in at 8349.83 and 8346.50 respectively (white and yellow line). The pair is currently at 8390.51. So there is some room until the index tilts a little more to the downside technically. Nevertheless, if the momentum gets going, falling below that area is not that far away. Be aware.
Right now there may be some smoke, but the fire is not yet visible. However, any spark can lead to a fire especially if traders/investors look to take some profit near all-time highs. As a result, be aware that "the market" will be on the lookout for more signs of smoke -either fundamentally or technically. From a technical perspective, moving below the 50 hour MA and trend line will be a tilt in the downward direction.
For the S&P, the 3054.00 ot 3055 area is home to its 50 hour MA and trend line (see chart below).
