Stocks continue to dance around like a centipede at a toe counting contest. Economic advisor Gary “Big Bucks” Cohen left the White House after banging his head against the wall during trade policy debates. This caused a 300 point drop in the Dow which then recovered when President Trump hinted that he would go easy on Canada regarding trade and tariff issues. Once again the underlying fundamentals of the market look good while the technical aspect is causing some jitters. At the close the Dow was off 82 at 24,801. Trading volume was light on the way down and heavy on the way up. The NASDAQ closed higher and the Russel 2000 small cap index was up big.
The all-consuming tariff and trade issue should come to a head in the next day or so but until the fog of rhetoric clears, market trading “flash boys” are having a heyday with all the volatility. The trade issue could go two ways. One is the “disaster route” similar to what President Hoover did in the 20’s when he put tariffs on imports to protect American jobs. The other is the “Kingdom of God” route where China is hit with tariffs while Canada and Europe are let off the hook. The disaster route could cause a sell off and the Kingdom of God route could cause markets to rally higher. Let’s hope a wise decision is made.