Here's My Best Trading Advice for This Murky, Unsettled Market
The market rebound Monday did nothing to fix the uncertainty around a broad range of tariff outcomes.
You're reading 0 of 1 free page.
Register to read more or Unlock Pro — 50% Off Ends Soon
Following some rebound action on Monday, the indexes are slightly negative on Tuesday as market participants await the Trump tariff decision. The president is scheduled to make a dramatic announcement at 3 p.m. ET on Wednesday.
While the market is struggling to discount the impact of the tariff news, it is having a difficult time because there is such a broad range of possibilities. Trump has two conflicting goals. On the one hand, he wants to use tariffs to raise revenues, and on the other hand, he wants to use them as a negotiating tool to drive reductions in reciprocal tariffs. There is also the goal of attracting more manufacturing in the U.S. that won’t be subject to tariffs.
Another source of uncertainty is the likelihood of responses from other countries and the European Union. They are going to react to whatever Trump decides, and there could be a trade war as negotiations take place.
The balance between tariffs as a revenue source and tariffs as a negotiating tool is extremely murky, which is why the market is having such a difficult time pricing in the ultimate impact. Volatility will remain elevated until there is greater clarity, but even after the tariff announcement on Wednesday, it is highly likely there will be ongoing negotiations and many modifications.
The tariff issue will remain in flux for a while, and there is also the issue of the economy that will impact the market. At 10 a.m. ET on Tuesday, the ISM Manufacturing and JOLTS-Job Openings reports will be released. Both should provide some insight into how fast the economy has been cooling. On Friday, the March jobs report will be issued and will likely generate a market response.
The market rebound on Monday after a very poor start helped to relieve some of the negativity, but it did nothing to fix the uncertainty that continues to build. Technical conditions remain very poor, with all the indexes under their 200-day simple moving averages. The indexes did bounce off the lows on Monday, but much more work is needed before we talk about a potential bottom.
My best advice is to stay patient and don’t trust bounces at this point. There are very likely to be big swings on the tariff news. Individual stocks are still being held hostage by the indexes, and there isn’t much value in individual stock selection right now. There are great opportunities developing but right now the market environment does not favor stock picking.
At the time of publication, Rev Shark had no positions in any securities mentioned.
