Following Trump’s tariffs pause announcement
yesterday, risk assets rallied hard with record breaking moves. The S&P 500 soared more than 9% in its third largest daily gain since World War II. One for the history books.
Liquidity and growth expectations are key drivers of the stock market, so when those go positive, we see the market rallying. The tariffs pause eased the recessionary fears and unleashed the huge bidding amid sentiment being way overstretched to the downside.
Even if we are not out of the woods yet, I’d
say that this new development showed that Trump just wanted to reset
global trade barriers and lower them for everyone (Europe has been even
calling for 0 for 0 tariffs). If he succeeds, that’s bullish for global
growth and stocks.
In the Trump 2.0
era conditions change quickly, so we should always be on top of things,
but all else being equal, I think the chances are skewed to the upside
for the S&P 500, and more so if US and China start negotiations.
On the weekly chart, we can see how the S&P 500 bounced almost perfectly from the major trendline and the 2021 high at 4805. For now, the 4805 level should mark the bottom and the sellers will need the price to break lower to start targeting the 4000 level next.
On the daily chart, we can see more clearly the huge rally yesterday which stalled at the key resistance around the 5512 level. That’s where the sellers stepped in with a defined risk above the level to position for a drop back into the 4805 support
