What We're Reading

The U.S. and global economy has reacted in mixed fashion since the election of Donald Trump as 45th President of the United States. One of the most significant potential fallouts though, is a trade war with China. Trump has spoken out against the current situation with China on a great number of occasions. Now he is in a position to potentially see through his pledges, some fear the emergence of a tit-for-tat trade war between the two countries. As the infographic below shows, the industries most endangered by any such war would be transportation and tech.

This chart shows the leading export categories of the United States to China in 2015.

You will find more statistics at Statista

Everyone knows our beloved five year rally seems to be weakening of late.  The big question is just "how" weak will it become.  If anyone tells you they know that answer, stop reading that website.  Certainly more and more sectors are now exhibiting profit taking even as fund managers lounge sipping Mai Tai's from their catamarans off the coast.  Indeed selling can beget more selling, however that doesn't mean we may not see a few days of buying to test overhead resistance and see if it holds; if the "top" is truly in.

Now is not a time (imo) to add to a long position.

Now is a time to be hedged or flat in a long portfolio.

Now is the time for day trades or brief swing trades.

Now is a time to let the charts show you direction.

A second enormous week of earnings lies before us.  While thus far companies are largely beat (which should be the case if they're well run), forward guidance hasn't been all that impressive from a sales growth perspective.

Buybacks and dividend increases

A few areas of concern are beginning to display in the consumer discretionary, consumer staples and industrial sectors.  We can point a finger at Russian sanctions, an overextended market, the Fed removing the punch bowl or maybe the consumer is simply tapped out but I think we all would agree, a decent correction certainly would be welcomed as an overdue buying opportunity.