Market On Open, Friday 9 May
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The Real Deal
by Alex King, CEO, Cestrian Capital Research, Inc
How do you know if we’re in a bull or a bear market? Easy. Like this.
The current trade policy cul-de-sac is a thing because, as everyone knows, the US runs a trade deficit with everyone else, and (in the Administration’s worldview) the dollars received by the US for this are inadequate compensation, and so import tariffs for goods coming into the US are needed in addition to a liberalization of goods exported from the US to third party countries. The market has gotten all concerned about the impact of this and so stepwise resolution of this should fuel an upward move in markets. Right? OK.
Well, yesterday the US and the UK agreed a trade deal; the US runs a trade surplus already with the UK, so none of the above applies. And yet the market mooned for a little while on the news (and on the exhortation of POTUS to Buy, Baby, Buy). It’s almost as if - the market was going to go up anyway!
The technical pattern in the S&P500 now is, to my mind, that the market will gun for new all time highs. It may not make it; it may get rejected once again at the February high; I don’t know. But if you ignore the April Wick Of Doom then you have a typical correction during March, a flattish digestion month in April (open to close on the month) and the start of a move up in May.
Let’s get into it.