This is Brian Bolan filling in for the Ultimate Editor, Jim Giaquinto. Jim will also be out again tomorrow and David Bartosiak is going to be the guest host for what could be a very lively session before the holiday weekend.
Last night I led with the idea of this being a back and forth market and it was more of the same today. The problem is, today was the step back and not the move forward that we would rather be talking about.
The trade war intensified today with China saying the US needs to correct its “wrong actions” before trade talks can resume. That signals a stalemate and there are fears that China could take it a step further with more retaliatory trade policies.
We used to call this a “risk off” day, as the market would sell the high beta, aggressive growth names in a big way. Things have changed a little as this hit the whole market, growth names and value names alike. Any small attempt at bounce was only met with more selling and only the traders that wanted to be on the short side made money today.
Swing traders have been loving this market, up one day and down the next… but the implications are that we could be moving lower again soon. It is one thing to see a 2% draw down on the major averages, but when the bonds see yields fall to the lowest level of the year, you know the flight to safety is on.
Most of the portfolios were quiet today, taking their lumps and holding on for better days. There were two portfolios that made some new additions, so let’s take a look at the moves they made.
TAZR is run by Kevin Cook and he decided to take some action into the sell off. Before the open the alert came out that the portfolio would be adding SQQQ, a triple short of the QQQ ETF which focuses on tech names. With about a half hour to go in the session the QQQ’s were down 1.6% so the triple leveraged was loving it and up 5% on the day.
Kevin wasn’t done on the short side. Around the lunch hour he added the SPXS ETF, which is another triple leveraged bearish ETF that moves in tandem with the S&P.
Counterstrike is headed up by Jeremy Mullin and he too moved to take advantage of the weakness in the market. Mr. Mullin decided to take aim at the small caps and added the TZA, a triple leveraged bearish ETF. Even as we saw a bounce in the final half hour, that ETF was up 6% for the day as small caps tend to get hurt a little more on sell offs like this.
Normally a Friday before a long weekend is super slow with volumes drying up and news flow slowing down as well. Traders tend to close positions early and try to get an early start for the holiday. Tomorrow probably won’t see that, as we await a comment from Trump or the administration.
If nothing comes tomorrow morning, the selling could continue. On the flip side, we have seen this market go back and forth a lot lately so it could rally back.
You never know what is ahead, but I do know that David Bartosiak will give us a wonderful summary.
See you soon,
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