Block Out the Noise

It looks like we will not know the full gauntlet of President Trump's tariff plans until after the closing bell today, with  a press event in the Rose Garden slated for 4 p.m. EST. 

In the meantime, stocks have taken the liberty of rallying several times today, though as we speak we have a substantial fade well off session highs. The fact remains that virtually no one knows what the precise impact will be of said tariffs. And that goes about triple for the market's ultimate reaction. 

Thus, despite how entertaining it may be to speculate on tariffs the far more instructive exercise is to re-focus on the developing technicals of the major indices and leading stocks and sectors. 

On the updated QQQ daily chart, below, which is the ETF for the top-100 stocks in the Nasdaq Composite Index, the above-noted fade is occurring precisely at the declining 20-day moving average (orange line). As we have discussed here and with Members previously, when a new downtrend emerges it is often helpful to see if Bollinger Band analysis is relevant. 

Specifically, when price punches below the lower Band (Bollinger Bands measure several different aspects of markets, including near-term overbought and oversold conditions when price moves out of the Bands) we often see a standard reversion rally (dead-cat bounce) to the "middle" Band, which is the 20-period moving average on any given timeframe. Here, it is the 20-day moving average because we are looking at a daily chart.

At that point, a strong downtrend would reveal itself with stiff rejection at the 20-day, continuing the downtrend to new lows, regardless of news and noise. 

I recognize there are any number of other scenarios out there, especially with typically bullish April seasonality and a general feeling from market players that we "are due" for a relief rally with legs. 

But, again, if this is a new bear market then some early signs will be a lack of an expected rally especially when it seems like it is of a high probability to occur.