The S&P 500 (ES) looked bad Monday night after the Trump vs. China tariff warnings, but it could not have looked better Tuesday morning. It's all part of the public getting knee-jerked around by the headlines while the markets seem to take it in stride.
The U.S. equity indices futures, which closed lower on Monday, rallied back up, and yesterday the S&P 500 futures made new all-time highs.
What didn't look good was the Shanghai Composite, which closed at its lowest level since November 2014. The Hang Seng Index entered a bear market for the first time since 2015 last week, and the Shanghai Composite was close to breaching the 2016 low in the aftermath of a rout that erased $5 trillion U.S. dollars in market value.
How long can China withstand the selling? My guess is that while the Chinese markets are oversold, that doesn't mean they are going to rally much. Many investors are hoping that the fresh round of negotiations scheduled in the next few weeks may provide some type of deal.
Our view: What can we say? The bears came in Monday, but they had to retreat yesterday. This has been the pattern lately. People want to call the market tops again, but there is no sign that the bears are going to follow through. We lean toward buying dips, especially if the ESZ18 holds above 2900.
Today’s Economic Calendar:
MBA Mortgage Applications 7:00 AM ET
Housing Starts 8:30 AM ET
Current Account 8:30 AM ET
EIA Petroleum Status Report 10:30 AM ET
Davin Blythe (FairValue Trader) has been a full time options trader since 2008 and has actively traded binary options since 2012. He also works at MrTopStep as a contributor/analyst/moderator of the IM PRO Trading Room, a social gathering for equity, futures and forex traders and routinely contributes in the MrTopStep Opening Print as well as on Yahoo Finance, Investing.com and other outlets.
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