There's Only One Issue That Matters to the Market Right Now
Here's my trading game plan amid a high level of uncertainty.
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Market participants continue to wrestle with the fallout of President Trump's tariff policies Wednesday morning. In a speech before a joint session of Congress, Trump defended his economic approach and acknowledged that there would be a "little disturbance" as he advances his plans.
Secretary of Commerce Howard Lutnick indicated that tariffs on Canada and Mexico could be "adjusted" very quickly, which is helping to boost the market Wednesday morning.
The more difficult problem of tariffs is highlighted by an influential Wall Street Journal writer. Chief economics correspondent Nick Timiraos, known as the "Fed whisperer," brings up concerns about how tariffs may trigger stagflation and notes that “President Trump’s decision to dramatically raise tariffs on imports threatens the U.S. with an uncomfortable combination of weaker or even stagnant growth and higher prices—sometimes called 'stagflation.'”
Market players are hoping that Trump will quickly indicate some willingness to adjust tariffs after they are imposed, but there is no clarity and a great amount of uncertainty. If Canadian and Mexican tariffs are amended in the next few days, it will be viewed as a very positive sign, but there will still be some economic fallout.
The market is currently emersed in a high level of uncertainty, and that is reflected in the very poor price action. There was some good bounce action on Tuesday, but it faded very fast in the last hour of trading. There is another bounce early on Wednesday morning as the market digests Trump’s speech, but without anything new on tariffs it will be very difficult for upward momentum to be sustained.
My game plan is to refine my shopping list and look for entries as volatility persists. I’m doing more very short-term trading rather than building longer-term positions. The market is still under pressure, and there will need to be some major developments in tariffs to provide a tailwind. I’ll continue to monitor charts and look for some support levels to develop.
If there are no immediate positive developments on tariffs, I do not expect the early strength to hold.
At the time of publication, Rev Shark had no positions in any securities mentioned.
