With the way the market has been swinging the past week some people are now deciding to trade Trump tweets over trade of charts. Don’t get sucked into doing that.
People are getting really confused and the commentary over trade on CNBC and Bloomberg is making it worse – because all of the people on WANT the stock market to go up and so are grasping on to any sign that a trade deal will come – almost believing that it is impossible for one not to happen – after negotiations between Trump and China collapsed last week.
Now I don’t think the market is going go into a bear market or even have a drop like we saw last Fall over trade. In when the first Trump tariffs on China hit last summer the market rallied into the end of September.
The Chinese seem to have misread Trump on a trade deal, while the stock market averages were so overbought going into last week that any pullback could have happened for any reason.
I’m not going to make predictions here on the trade deal, but there now appears to be an approximately 30 day window for negotiations to continue even if there is no sign that they will succeed. Every morning I’m posting the most important news of the day for you before the market opens and you can see those stories to keep up with the trade developments as they unfold.
So today check this one out if you want a good overview:
If you just forget about the news though and forget about trying to trade tweets and simply stick to the charts then you can make a simple plan.
When a market gets overbought like the US stock market averages did two weeks ago you typically will then see a period of consolidation for at least several weeks before a new sustainable rally begins or a pullback – which often ends up being roughly 10%.
That overbought signal two weeks ago told us to take the foot off the trading pedal and that some should even take some money off of the table. The margin players and triple ETF traders are in big trouble again.
So if these negotiations are going to go on for another month or so we can see the VIX slowly go up to the 25-30 area to bring in a panic correction low or just see the market drift during that period of time.
I’m going to wait to trade it, either way, it plays out. Instead of trying to game a tweet for 30 minutes I’m going to let the setup come to me.
That’s how you get a fat pitch in the market.
That doesn’t mean I’m doing nothing. Last week I bought a stock in my private Power Investor trading group. The best way to trade isn’t to trade headlines and play for miracles, but to get into the best stocks that are in the best sectors and use market pullbacks to do that.
My book Strategic Stock Trading can help you do this. This book lays out the simple methods and key indicators I use to keep on top of the trends of the market and to identify the best stocks to buy.
If you take advantage of my special book giveaway offer you’ll also get into my private trading group and receive my coming buy alerts to take advantage of this Fed front running trend.
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