Hold on to Your Hats

[Click on the picture above to watch Murray’s analysis of the S&P 500 and crude oil after Trump’s tweet that he will be raising tariffs on Chinese goods this Friday.]

Trump may be rattling sabres during negotiations by tweeting that he will be raising tariffs this Friday. Who knows if it will actually happen, but it is a concrete sign that negotiations aren’t going as well as everyone was hoping.

China may not like having a gun held to their heads this week and may react badly to it.

US futures have opened in the overnight market down around 50 points or 1.5%. After some early weakness prices are attempting to rally, but I’d expect to see the selling return before long.

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There’s a chance we could see prices accelerate to the downside

In today’s update, I have a look at the weekly charts on the E-mini S&P 500 and point out that there hasn’t been a weekly sell pivot since the rally began at the start of this year. A weekly close below 2901 in the E-mini S&P 500 will confirm the weekly sell pivot so I’d expect a big battle around that level this week. If prices are well below that level as we head into Friday’s trading, there is a chance we could see prices accelerate to the downside.

Last week, WTI crude oil prices created a weekly sell pivot from very close to the sell zone of the wave down from last year’s high, so things are set up for more weakness in oil prices in the short term. Gold prices are also nudging up against the bottom of the most recent key bar up in the monthly uptrend, so it won’t take much to see gold prices shooting higher again.

The Nikkei is looking wobbly with prices testing the sell zone of the monthly sell pivot candle. If we do see a risk off event over the next few weeks, the Yen will probably rally strongly which will put a lot of downward pressure on the Nikkei.

After tapping a new all-time high last week, the S&P 500 is looking overbought in the short term and is at risk of having a sharp correction to shake out the complacent bulls. That shake out may be short lived, but I have a target of 2650 on a correction which is nearly 9% lower than current prices.

Everything hinges on the US–China trade talks now. If they really have gone up in smoke, it’s likely we’ll see prices plunge.


Murray Dawes,
Editor, Alpha Wave Trader

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Murray Dawes is the Editor of Pivot Trader and contributing Editor at Money Morning. He was one of five, from 5,000 applicants, chosen for a graduate position with the Swiss Banking Corporation — now part of banking giant UBS. The bosses quickly cottoned on to his potential and pushed him up the ranks as a futures broker on the floors of the Sydney Futures Exchange. Murray later broke out on his own and developed custom trading systems to trade leveraged financial instruments like futures. Due to his success, Murray became the ‘hired gun’ trader for Australia’s rich and famous. Today, Murray runs a trading service through Fat Tail Investment Research to help everyday Aussie investors use his advanced trading methods.

Money Morning Australia