Apparently, since the EU MIGHT have given Boeing rival Airbus $11Bn worth of subsidies since 2004, the Trump Administration will retaliate by placing tariffs on cheese, bicycles, kitchen knives, artist's brushes, etc. While this may seem crazy and illogical, it's really just another day in Trumpland, so no one is really batting an eye and, although the German and European stocks have turned down on the news, the US stocks are, as usual, ignoring the inevitable retaliation this is likely to cause.
Technically, Trump isn't allowed to DECLARE tariffs whenever he wants and it's kind of hard to see how cheese is a national security risk but that ship has already sailed with the Chinese tariffs (which are also not going away) but what's the point of even pretending we follow the rules anymore?
We're testing another major level at S&P (/ES) 2,900 this morning but, as noted in yesterday's PSW Report, we shorted it into yesterday's close anitipating that SOMETHING would cause us to pull back after testing that level. So far, we're up $250 per contract so we can set a stop at $200 and lock in the gain and raise the stop $50 for each $75 we gain going forward.
Since the S&P is up 50 points on this run, a weak retrace should be 10 points, back to 2,890 so our expectation, at $50 per point, per contract, is to make $500 per contract just following the 5% Rule™ – isn't that nice and simple? If we're lucky, we get a strong pullback of 20 points to 2,880 and we'll know if we're getting a strong pullback because the weak bounce (2 points) will fail at 2,992 so our stop will the $400 gain at that line by the time we get there. See, Futures are easy!
Once we go below 2,892, that becomes our stop and it's almost certain we'll bounce back to there and test that line so we can do our calculations on the other indexes to see how they are bouncing too. Once we get below 2,890, our next stop should be the weak bounce line off 2,880, which would then be 4…