Will CHINA retaliate?

As we are waiting for futures to open, bigger news could be how CHINA will retaliate.

US CHINA trade dispute has gone well beyond the scope of phase 1.

It is about " unrest and foreign intervention or support of Hong Kong dissidents "

US UK CANADA and other countries are giving active support to dissidents plus are making policy decisions to support any exit from Hong Kong.

UK has widened the eligibility requirement to give residency in UK to include most of Hong Kong residents...

Based on all these recent developments, it must not surprise anyone IF there is " retaliatory policies from CHINA "

How wall street will react depends on Hong Kong / Shanghai reaction overnight...

Last time there was no reaction when we opened......hoping that will be the case this time around.

Back to US markets, here is the RSI read :

Nasdaq            65.01

S&P 500          63.54

DOW               62.03

IWM               60.75

SOX               59.66

XLE               55.60

IF we analyze above numbers, it is easy to see that all 3 major indices are in " overbought territory "

SOX & Russell 2000 also in overbought area

This may suggest any negative headline about COVID-19 or CHINA may impact markets.....so keep an eye on news flow / tweets....

XLE has under performed despite major improvement in crude prices, sometimes there is a lag in crude prices and stocks......

It is highly suggested that gains needs to be booked quickly....

Rotation will play a key role in getting better results based on overbought / oversold sectors.

Message of the market has been very clear so far, things may not be as bad as feared......

Normal rotations and pullbacks still to be in play going forward.

Good luck with your own thesis and comfort level with this TAPE.

BLOG does NOT give buy or sell.

Saleem

Posted in: Mixed