Trade war fears dominated market action today, March 12, 2018. For the first time since President Trump announced his plans to raise tariffs on steel and aluminum, the market clearly responded negatively to the possibility of a trade war.
I’m not really interested in thrusting my opinion about tariffs on you. I gave my opinion on the Saturday Show two weeks ago. My opinions have nothing to do with making money in the present. As traders, we have to be agnostic to news events. We have to respond to what large players are doing in the stock market. Our own personal opinions are irrelevant. I can’t stand stock trading newsletters that are ran by arrogant self-centered soap-box preachers who want to force their own stupid political opinions on to their readers in a kind of personal activism or something. It is far better to be agnostic in your opinions and to just trade what’s in-front of you.
Something very important happened on Wall Street today. Large multinational industrial companies sold off. This is an objective fact not to be confused with subjective opinion. Remember, the goal is to be agnostic in our trading and to track and ultimately respond to what large players in the market are doing.
Below is a table of industrial goods stocks and how they performed today.
The entire industrials sector fell -1.22% today.
The Consumer Discretionary Bullish Percent Index (BPI) plunged -3.73% today.
The Consumer Discretionary BPI is testing its early February lows. Since February 1, 2018, the Consumer Discretionary BPI is down -41%.
What is bothering this market is that big industrial companies inside the U.S. like Boeing, will need to buy higher priced U.S. steel to build their planes. Competitors like Airbus will continue to build their planes with cheap Chinese steel. This difference in price will make U.S. multinational companies less competitive, especially when the U.S. dollar begins to rise from interest rate hikes.
Market-breadth continues to be strong.
This suggests that the worst of the February 1st correction may now be behind us.