All roads lead to trade

●US–China G20 trade showdown scheduled for Saturday

●Trade war dominating market news cycle


Although today brought the latest GDP data (in-line with expectations) and FOMC minutes are released tomorrow, traders looking for a decisive follow-through in the US stock market—one way or the other—may have to wait until after Saturday’s trade pow-wow between President Trump and Chinese President Xi Jinping.

But every news blurb about the summit’s possible outcome—or, say, random tweets from the major players—has the potential to trigger short-term fireworks. The following five-minute chart of the Nasdaq 100 (NDX) from yesterday is a good example.

Nasdaq 100 (NDX), 5-minute, 11/26/18 – 11/27/18. Good trade war, bad trade war.

Source: OptionsHouse

After a solid gain on Monday the index dropped fairly sharply in early trading after President Trump said it was “highly unlikely” he would go for a deal proposed by Chinese President Xi Jinping that would prevent the US from hiking tariffs on $200 billion worth of Chinese imports in January. He also reiterated a threat to impose tariffs on an additional $267 billion of goods, which he said could include Apple iPhones.1

The NDX rebounded, but swung from red to green before reports emerged that, according the White House economic advisor Larry Kudlow, President Trump was open to making a deal.2 Instant enthusiasm!

And so it goes.

Right or wrong, sometimes a particular issue or theme so dominates market psychology that almost all other potential catalysts get swept under the rug, at least temporarily.

Today’s numbers (all times ET): GDP (8:30 a.m.), International Trade in Goods (8:30 a.m.), Corporate Profits (8:30 a.m.), Retail Inventories (8:30 a.m.), Wholesale Inventories (8:30 a.m.), New Home Sales (10 a.m.), EIA Petroleum Status Report (10:30 a.m.).

Today’s earnings: Burlington Stores (BURL), Rockwell Collins (COL), SINA (SINA), Tiffany & Co. (TIF), Weibo (WB), Guidewire Software (GWRE).


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1 Trump dims hopes of China trade deal with fresh tariff threat on Apple phones. 11/27/18.

2 Reuters. Trump open to deal with Xi at dinner but with conditions: Kudlow. 11/27/18.