Trade War Turmoil Keeps Markets Flat

[Chart courtesy of MarketWatch.com]

  1. Moving the markets

Today, it was trade tensions that kept the markets below the unchanged line, and the bears in charge, although a rebound limited the potential losses and pushed the Nasdaq back to the breakeven point. However, the Dow dropped for the 5th straight day.

Emerging markets continued their downward slide, while foreign markets in general were weak by gapping down and subsequently affecting our International TTI negatively (see section 3). This indicator has now weakened more than its Domestic cousin, an occurrence that has in the past often served as the canary in the coalmine.

As we saw last week, Tech outperformed Financials again while big banks lagged small banks as interest rates were just about unchanged, along with the US Dollar Index (UUP). The 10-year bond yield gave back 1 basis point to end at 2.92%.

Rising energy prices gave an assist to equities by limiting declines caused by fear over the continued U.S.-China trade tensions, as traders are still trying to digest the announced $50 billion tariffs on Chinese imports.

So far, equities have managed to discount a host of negative global economic developments but, for how long can these ongoing and worsening events be ignored? Especially, if a full-blown trade war starts to have a negative impact on corporate earnings. Since that is the big unknown, we will have to wait for the answer to develop.

  1. ETFs in the Spotlight







  1. Trend Tracking Indexes (TTIs)

Our Trend Tracking Indexes (TTIs) were mixed with the International one once again taking a steep drop while the Domestic one gained a tad.

Here’s how we closed 06/18/2018:

Domestic TTI: +2.85% above its M/A (last close +2.83%)—Buy signal effective 4/4/2016

International TTI: +0.82% below its M/A (last close +1.26%)—Buy signal effective 7/19/2016



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