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'It Ain't Over 'Til It's Over'

Apr. 09, 2018 9:49 AM ETFXI, SOXX
Clif Droke profile picture
Clif Droke


  • Market remains vulnerable to negative news as some weakness persists.
  • There are some encouraging signs of a coming bottom, however.
  • For now a cash position is still recommended as selling pressure remains.

Just when it looked like the turbulence was subsiding, things got interesting again for the stock market on Friday. The back-and-forth action in the equity market has mirrored the high intensity tennis match between the U.S. and China over trade tariffs. There are some encouraging signs that the market could post a final low sometime in the coming week, which we'll discuss here. Until the market's internal selling pressure simmers down completely, however, it's too soon to assume the bottom is in since the potential for more downside still exists. Or as Yogi Berra famously said, "It ain't over 'til it's over."

The benchmark S&P 500 Index (SPX) closed Friday's session with a 2.19% drop after stocks were sold heavily from the opening bell on trade fears. The Dow, Nasdaq, SPX, and Russell 2000 declined between 1.9% and 2.3% during Friday's session. Equities fell out of bed following the news that President Trump ordered the Office of the U.S. Trade Representative to consider whether it would be appropriate to impose an additional $100 billion of tariffs on Chinese imports on top of the proposed $50 billion of tariffs announced on Wednesday. China quickly responded, saying it would "do what is necessary to protect its interests at any cost" if the U.S. ultimately pressed ahead with such a tariff plan.

Wall Street was particularly on edge by the hard-line tone of administration officials on Friday as they discussed the new proposal. There was also a sense that the administration was unconcerned about the effect the proposed trade policy is having the stock market. President Trump noted that the stock market might have to suffer a while as he works to protect the trade interests of the U.S. Meanwhile, Treasury Secretary Mnuchin said in a CNBC interview that he is not focused

This article was written by

Clif Droke profile picture
Clif Droke is an equity research analyst and writer for Cabot Wealth Network. He has covered equities and commodities, specializing in gold, since 1997 and is the editor of the Cabot SX Gold & Metals Advisor.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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