- The market is dead flat this week. Waiting on tariffs
- The DXY dollar index is breaking its 200 DMA (1st support).
- The next (more important level) is 96 on the DXY.
- More dollar weakness will be very important for EM's (& other markets)
As it usually does, the stock market rallied on the day the Fed made their regularly scheduled announcement and held a press conference. (We the word “usually” in the previous sentence because Chairman Powell had a couple of stumbles early in his tenure, but he seems to have righted the ship nicely.) The rally, however, was a mild one…and the stock market remains basically dead flat so far this week (-0.14% to be exact). In other words, the focus this week was never going to be on the Fed. It was always going to be on the trade issue…and since we still haven’t received any definitive word on the December 15th tariffs, investors are just sitting on their hands until they get that definitive news on this issue.
Pretty much everyone (including ourselves) is looking for the new tariffs to be delayed/postponed by Sunday…whether we get a “phase one” deal or not. This is already priced into the stock market, so although we’ll probably get a very brief relief rally if/when this news is confirmed, it’s hard to think that it will create any sustained further advance (as it is already priced-in). Therefore, if we’re going to see a powerful move before the end of the year, the “trade announcement” is going to have to include either an implementation of these new tariffs (very bearish) or a roll-back of some of the existing tariffs (bullish). (The market has also priced-in at least SOME chance that the existing tariffs will be rolled-back, so the ...