The Russell 2000 went sideways today and we still do not have the +DI line crossing above the -DI line:
Continue to stay on the sidelines and in the safety of cash as we head into midterm elections tomorrow.
Unfortunately we will probably have another day of choppy, directionless trading tomorrow as we wait for the polls to close.
Even after elections, we still have the market coming to grips with the impact of rising rates on consumers. A great example of this concept was the news today that Apple has canceled a production boost for its iPhone XR.
Sales for Apple products are slowing as consumers feel the pinch of higher interest rates which is why Apple will no longer report unit sales numbers either:
China’s economy is slowing fast and that’s hitting U.S. multinationals hard. In particular, a crashing Chinese economy will negatively impact U.S. chip makers.
The midterm elections are not going to make the slowdown from rising rates, and the drop in demand for US chips by China, suddenly just go away. After the midterms, we need to be extremely cautious and see if the downtrend that began in early October continues.