What a GREAT day to be long the markets! My bank account is LOVING this. Will it last?
That depends on a few things:
- Keep in mind, the trade war is not over. Heck, the trade talks aren’t even over yet… they end this afternoon. I don’t let my guard down when it comes to the US/China trade war.
- There is still signs of a slowing economy. But, I think most of it relates back to… you guessed it… the US/China trade war. Certain numbers (i.e. durable goods) are faltering. Business sentiment is also faltering.
- Lots of institutions have been pulling out of the market and moving their clients into bonds. This is a sign that they’re uncertain in regards to the future. However, most from what I have read, do not think a recession is imminent.
On the bright side, the economy is also showing that it’s still in good shape (if not great shape):
- Unemployment is at crazy-low levels. It’s pretty much at full employment.
- Business are still hiring at a nice clip. When you factor in being at full-employment (basically), that’s a good sign. I mean, jobs are still being created, even tho there’s not as many people to fill them… think about it.
- Earnings seasons have been slowing, but are not dead. Third quarter earnings season kicks off this month… it will give us more information about the economy and its direction.
Here is a DIA (Dow Jones ETF) chart I made this morning. From a technical standpoint, things are looking good as well.
But remember through this earnings season, that many companies are claiming the trade war is what’s hurting them. If that is true, and if the trade war makes progress this week (i.e. cuts back or eliminates tariffs) those businesses numbers should start to climb again. Just in time for 4th quarter and year-end results.
Either way, enjoy today longs! If you did your homework, did proper analysis, and stuck to your trading plan, you are making money today.
This post was my opinion, and my opinion ONLY. Do not base your investment decisions off of this post. This post was NOT a recommendation to buy or sell any investment. Consult a professional financial or investment adviser.
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