Collateral Damage in the China Trade War

The trade war with China is on. It started with aluminum and steel.  Now it seems to be escalating back and forth. The stock market is concerned because of course everyone knows…or they should, that this is how the Great Depression got fueled.  So what starts out as very targeted and seemingly under control, can rapidly spin out of control.  And this is where collateral damage occurs.

Bite Out of Apple

The concern with Apple is that it could get caught up in a trade war with China.  If China decided to impose tariffs of some kind on iPhones or various components, it would significantly hurt Apple.  Or China might organize a boycott of U.S. related products. China is just one concern related to Apple stock. There are other rumors floating about iPhone production and demand.

This week Apple (AAPL) stock got hit hard on Thursday – Friday dropping 6.8% and ended down $9 for the week. Apple’s chart below shows the key support at $165 that the bulls need to hold. If that breaks I believe it will rapidly test the February low.

Collateral Damage

If Apple gets hurt in this trade war with China then it has a rippling effect on several other stocks that supply Apple. Below are 4 stocks that are already showing signs of damage.

The first three stocks are showing signs of a major top. Quorvo is less clear but still at critical short term support.

Take a Loss | One of the Hardest Things to Learn

Whether you are a trader or an investor, it doesn’t matter.

One of the hardest things to learn is to take a loss. Losses are part of the trading/investing business.

It’s nothing to be ashamed of.  You have to work your plan. (you do have a plan don’t you?) Sometimes it doesn’t work out. Sometimes it doesn’t work out several times in a row. Continue reading

Financial Sector | Where There’s Smoke…

You know the old saying, where there’s smoke there’s fire.  The Financial ETF (XLF) just lost 9.7% in the last 10 trading days. So when it comes to the financial sector of the stock market what is the smoke?

The smoke for financials is a higher than normal rise in certain interest rates that might signal financial distress. Recently the spread between the London Interbank Offered Rate (LIBOR) and Overnight Indexed Swap Rate (OIS) has been rising rapidly and now stands at the highest level since the Financial Crisis. Continue reading

Boeing and the Timing of a Cover Story

Boeing is one of the Dow Jones Industrial Average’s 30 stocks.  It has had explosive growth in 2017 and the price appreciation continued into 2018.  In 2017 it was up 89% and at one point, on February 27 it was up an additional 23.6% from its 2017 close. Truly amazing growth.

This is not some social media stock. It is not a leading edge semiconductor stock. This company designs and assembles passenger airplanes, a variety of military jets, rockets, satellites and other space related craft and devices. So it was a little surprising to see the stock basically go vertical in price action. Continue reading

Nasdaq Goes to the Beat of a Different Drummer

I’ve mentioned this to the Insider Members several times lately. The Nasdaq Composite Index (Nasdaq) seems to go to the beat of a different drummer.  Its bounce back from the February 9 low was much stronger that the other indices. So on Friday it pushed to a new all-time high.

It’s interesting that this type of disconnect has been seen before at two major tops. The first chart below, shows the 2000 top with the Dow Jones Industrial Average (DJIA) peaking on January 14 and the Nasdaq peaking 8 weeks later on March 9. Continue reading