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Tariff-ic Tuesday - Market Shakes Off Trade Wars As Kim Considers Disarming

Philip Davis profile picture
Philip Davis


Trump wins!

North Korea said they are willing to hold talks with the US about giving up nuclear weapons and "normalizing" relations with Washington (whatever normal is these days). The two Koreas also agreed to hold a summit meeting between Mr. Kim and President Moon Jae-in of South Korea on the countries’ border in late April, Mr. Moon’s office said in a statement.

“The North Korean side clearly stated its willingness to denuclearize,” the statement said. “It made it clear that it would have no reason to keep nuclear weapons if the military threat to the North was eliminated and its security guaranteed.”

“The North expressed its willingness to hold a heartfelt dialogue with the United States on the issues of denuclearization and normalizing relations with the United States,” the statement said. “It made it clear that while dialogue is continuing, it will not attempt any strategic provocations, such as nuclear and ballistic missile tests.”

Between that news and the growing consensus that Trump's tariffs won't really affect much of the Global Trade (the EU retaliated with just $3.5Bn in proposed sanctions against US goods) the markets are sharply higher yet again and, once again we'll check in on the S&P's bounce lines to answer the eternal question: "Are we there yet?" Here's the line we were looking for a month ago:

And here's where we are today:

I would be more excited but last Monday we had a fake 80-point gain on low volume and yesterday we had an 80-point move on low volume - so it remains to be seen if it actually holds up for more than a day. Also, last Monday was far more impressive than where we are now and we fell 140 (5%) points by Thursday - so let's not get carried away, OK?

This article was written by

Philip Davis profile picture
Philip R. Davis is a highly respected options trader, entrepreneur, and founder of philstockworld.com, one of the most influential stock and options trading sites on the web. With over 20 years of experience in the financial industry, Mr. Davis has earned a reputation as a trusted authority on options trading, equities, and macroeconomic trends. As the creator of Phil's Stock World, Mr. Davis has built a vibrant community of traders and investors of all levels, providing them with unparalleled insights, analysis, and trading ideas. Whether you're a beginner or a seasoned pro, Phil's Stock World offers valuable resources that can help you navigate the complexities of the financial markets and achieve your investment goals. With a unique approach to teaching the art of options trading, Mr. Davis and his team of expert contributors including Optrader, Sabrient, Income Trader, Trend Trader, and Warren the Trader AI provide members with live chat sessions during trading hours, real-time trade alerts, and in-depth technical and fundamental analysis of hundreds of stocks. In addition to his role as an options trader and financial guru, Mr. Davis is a serial entrepreneur and founder of several successful companies, including Accu-Title, a real estate title insurance software solution, and Personality Plus, a precursor to eHarmony.com. He is also the President of Delphi Consulting Corp., an M&A consulting firm that helps companies of all sizes obtain funding and close deals. With his unique blend of wit, humor, and financial acumen, Mr. Davis is a sought-after speaker on options trading and financial markets. His writing style is both entertaining and informative, providing readers with specific and actionable trade ideas, as well as deep insights into the macroeconomic forces that drive market trends. In short, if you're looking for a trusted and experienced options trader and financial expert, Philip R. Davis is the real deal. Join the growing community of traders and investors at Phil's Stock World, and start profiting from his insights and analysis today.

Analyst’s Disclosure: I am/we are short DIA, SPY, QQQ, IWM, NFLX. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

Positions as indicated but subject to RAPIDLY change (currently mainly cash and an otherwise slightly bearish mix of long and short positions - see previous posts for other trade ideas).

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (24)

Thanks for your insights Phil.

I agree with you about the voodoo-technics; when most everyone is thinking the same thoughts on "fibs and Elliott Waves", does it not seem fundamentally that this is the "herd's-tracking-patte... Therefore most trading algos are set accordingly.
kesslerblvd profile picture
Nasdaq keeps on with one step back and three or four steps forward. Nasdaq 8,000 this year and SPX 3,000.
Shark39 profile picture
Wow, working for Fair Trade instead of Free trade when American's got the short end of the stick. Now just maybe making the World safer. A leader instead of a politician. The we have Goldman Sach's Wall Street largest manipulators, better known as a Crook. Thanks Phil for your insight.
agent bitter profile picture
"And why not? As Steve points out, we're buying them with currency that is backed by nothing to the point that we're willing to exchange that for currencies some kid made up in their basement last week (see the Madness of DogeCoin for a great example of that). There are always "experts" willing to explain to you why "this time is different" and we can create wealth out of thin air and everyone will be a Billionaire and there will be no consequences - it all sounds great, until it doesn't" YAAAAZ.

it doesn't. vxx, uslv, nugt, cash.

ONE PROBLEM. The spike down will look like like brexit. so many people are waiting with cash....
rod_s profile picture
Trump wins? Take that, libtards! Also, about manufacturing money out of thin air, I just recently started playing with options and I am continuously amazed at how frequently I can start a position and then close it out profitably, by buying or selling to someone else in a matter of hours/days. Have both parties created any real value, at all? Or are we really just tossing a few electronic credits around for fun? I also used bitcoin profits to buy some plane tickets for the holidays and was amazed at how a made up currency was converted to "real" currency (backed by nothing) that then showed up on an airline carrier's income statement as "real" revenue! Amazing times we live in!
Comfortably Numb profile picture
There ain't no way in hell Kim is gonna disarm. Nukes are his insurance policy. He saw what happened to Libya and Iraq...he knows that once he gives it up.......he will be attacked.
Ben Gee profile picture
There was no China backing up Libya nor Iraq.
Ben, even if China said so, do you think they'll intervene?
Ben Gee profile picture
China did intervene in the 1st Korean war.
If the US start a war, maybe China will lend N Korea a few of its missiles. And if the US use nuke, China may lend N Korea a few of its nuke too.
Short NFLX? It takes some.... I like that list above; the economy of nothing. Except for NFLX; they create content that is pretty successful I believe. I'm not long NFLX by the way.
NK readies itself to be invaded by the US; they crave some Coke(tm) and McDo(tm) finally.
I agree that prudence is warranted, I don't have a good feeling about this giddy market.
Truebluealpha profile picture
Thanks for this daily dose of comedy, Phil. ("Whatever normal is these days" indeed!)

That's an impressive and hilarious list of our vaporous economic giants (Amazon, et al), and it could probably benefit from a separate category of companies that don't bring in dollars, dogies, or any other kind of coin that translates into that antiquated term, "profit." As in, "Tesla makes cars but no money," and then you can take it from there...

All right, back to upping my cash position in the U.S. while looking for a nice tidy index fund in the North Korean stock market!
Comfortably Numb profile picture
I happen to agree with you Phil. There are a lot of land mines out there. Willing to take some chips off the table and not chase the remaining upside here.

I am using UVXY as my hedging tool.
agent bitter profile picture
where's your exit if you don't mind me asking?
Buyandhold 2012 profile picture
Kim considers disarming?

If you believe that, I have a bridge to sell you at the North Pole.
Looks like North Korea threw an easy pitch, let's hope for the sake of the markets, world peace, etc that the Trump admin doesn't screw this up. Peace in exchange for giving up nukes is *exactly* what we have always wanted...Will Trumpy look this gift horse in the mouth?
Ben Gee profile picture
All N Korea want is a promise from the US, S Korea and Japan not to take military action against N Korea.
This is like the Cuban crisis.
Jay5 profile picture
I am short both REITS and SPY via put contracts through end of April at yesterday's close prices and long on some mining stocks bought cheap and a silver ETF... Bit of a gamble but I read the graphs and sentiment slightly differently. No big positions, small ones taken during yesterday's run ups. Plan to add if SPY goes below $271, getting out if SPY breaks solidly above $274.
Jay5 profile picture
Also, thank you for the information Philip, I plan to subscribt tomorrow.
Philip Davis profile picture
Looking forward to seeing you inside!
Jay5 profile picture
So, to follow up. My SPY short puts have not yet gotten into profit region, they are basically sitting on neutral, as for the REIT puts. The silver ETFs are up, but those will be volatile I believe. The stocks and silver stuff are more of longer term plays. While the ETFs are purely for gains on priciple, the stocks pay dividends, are good value companies and I think will do well over the next 5 years. I attach a graph to anyone who is interested in some of my logic with SPY:
I bought puts as SPY was breaking below the 61.8 Fib last week. On Friday I maintained my puts as we openened on a gap down on the day, but as we broke above the 38.2 Fib and other trend lines indicated we would be filling the opening gap, I took my profits and ran. That is until the end of Monday hours as it looked like the market could not break the 61.8 Fib again. We didn't have a solid bounce, but I took a small short put position again as the SPY chart suggested further decline, combined with what I saw happening around the world and in the White House. If you look at silver, it looks poised for a major break out (see commercial versus private short vs long positions and examine your charts as you see fit). This again suggests to me a decline in the stock market. Plus, larger and very overvalued companies are due for a reckoning soon. Tesla already seems to be breaking down, likely on word of Q1 production and earnings short falls plus the competition starting to come out in impressive ways with their electric cars. I have no idea what is going on with Netflix...
Not that I really expect anyone to pay attention to my comments, but I think comment count helps authors plus putting my underware out in the open has been helping me stick to plans and keep more focussed. That said, a solid and constructive smash of my thought process is always welcome.
Good luck to all and happy hunting.
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