Tariffs and SPX gap
|S&P 500 price action at the close was to be decisive, I wrote to client early Friday – and it proved to be so, Not even all the interest rate sensitive plays ticked up, just some were more resilient (check uilities, power generation). As I talk and support with charts in Saturday‘s extensive video, that sets the tone for more than entry to the week ahead, and it‘ll be on the risk-off end.
That‘s thanks to tariffs that I was warning about a week ago – Thursday‘s Canada announcement was quite recovered Friday, but Saturday‘s one on e.g. EU, won‘t be. That‘s also what breadth indicators (no matter the still positive, but long-term McClellan summation index) highlight. At the same time, Issued Sunday warning first to clients, and then a rhetorical question on Twitter as to the upcoming bearish gap (closure attempt).
Rate cuts are coming, just not in Jul – I favor Sep way more as tariff impact on inflation will be more readily apparent to the data-dependent Fed – and USD with yields are starting to paint a certain picture (have yields gone up when tariff wars first entered headlines? Would the USD move now support risk-on, are we seeing domestic stocks, smallcap somewhat insulated?) that I‘m also discussing in the latest video.
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