U.S. markets closed the month of May nearly back to the high. The roller coaster of fear and worry that ran through the market since April 2nd has apparently run its course for the moment. President Donald Trump’s “Big Beautiful Bill” has passed the House of Representatives and now moves forward to the Senate. Markets are not out of the woods yet as there are still many structural issues that need to be overcome for the US economy to remain on course.
The above Chart of the $QQQ, which represents the NASDAQ 100 shows a return to the market highs. But this possible triple top could show trouble on the horizon as the market comes in to heavy overhead resistance.
Tariffs: Where do we Stand?
For the most part, tariffs seemed to only have been a negotiating tactic. Because of the frequent and rapid changes, we will summarize the current tariffs deals that have thus far been negotiated:
- UK is currently at 10%
- China is at 30%
- EU tariffs – on hold
The 50% tariff’s that are planned to go into effect against the EU have now been postponed till July 6th. To make things even more complicated, a federal court has ruled tariff unconstitutional, which were overturned by the appeals court and may even go up to the Supreme Court.
First quarter earnings season really did not reflect any changes caused by the tariffs yet. As a result, the earnings for most companies remained in line with expectations or even beat earnings expectations. This was most recently illustrated by Nvidia. After positive results in $NVDA, the entire semiconductor sector rallied.
Strains in Other Places
On a negative note, the US markets are starting to show signs of strain, specifically in the housing market where new home sales have dropped considerably and interest rates are at a multiyear highs, which make new homes less affordable. Conversely, unemployment is still relatively low and inflationary pressures appear to have subsided for the moment. But consider that tariffs have largely not impacted many products as of yet.
As the old stock market proverb says: Sell in May and go away and as markets sit at all-time highs with a possible triple top formation, it is possible that this year that old proverb might ring true. Certainly, this market has been very good from a trader’s perspective. It has not gone up very much, but the volatility has given tremendous trading opportunities. Trading cautiously is probably the most prudent way forward in this current situation of tariff induced uncertainty. Until next time, Trade well.
Written by Michael DiGioia, Director of Education
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