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Tuesday, June 19, 2018

Market Alert - The Close

RUTX has cracked positive by a hair and other growth indices have recovered significant lost ground. SP500 held he 20 day MA and rebounded to cut the losses. NASDAQ rallied back over the 10 day EMA after a gap lower. SOX looks shaky, but it held the 50 day EMA on the low and has bounced some. Once again stocks try their hand at recovering from trade war news, this one a serious ramp up in the trade battle.

SP500 -10.39, -0.37%
NASDAQ -19.87, -0.26%
RUTX +0.01%

Not all is candy and nuts as industrials lag on any rebound, e.g. BA, HON, CAT. Indeed, it can be argued they are not rebounding. Contrast that with NFLX up 3.8%, AMZN +0.60%. NVDA is off but is rebounding off the 20 day MA toward the close.

One can see the similarity between the 1980's USSR/USA head butting over nukes in Europe, Star Wars, and the US' willing to spend as much on weapons (thanks to a booming economy) as necessary to put USSR at a strategic disadvantage. Today Trump is gambling the US has more economic resources than China given China relies so heavily on the US buying Chinese goods while China only buys $130B of US goods. The US is also showing China the US will spend to patrol the South China Sea and protect our allies there. It is once again a fascinating dynamic that is playing out necessarily after 30 years of doing nothing. Unfortunately that is how it works here as it takes a certain type of President to do these things.

Anyway, we closed out several China related positions, e.g. BABA, BZUN, BIDU. Perhaps too hasty as BZUN is showing a nice doji with tail, but if they hold and look good, okay, we can move back in. Otherwise we are sitting pretty tight.
Jon Johnson, Chief Market Strategist
InvestmentHouse.com
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