Summary:
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US indices move to daily highs after Trump tweet
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President hints towards Chinese trade breakthrough
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US500 jumps over 20 points to trade back near recent highs
US president Donald Trump has taken to social media this afternoon to deliver news on what appears to be a possible breakthrough on the current US-Sino trade tensions. Trump tweeted the following message this afternoon, which caused a near immediate spike higher in US stocks which had been languishing on their lowest levels of the day just before the post.
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Trump’s tweet on an apparent breakthrough in the tensions between the US and China has sparked a rally in stocks, with US benchmarks jumping almost immediately in reaction. Source: Twitter
The US500 jumped on the tweet from Trump with price gaining almost 20 points in just a matter of minutes after it was posted. The market has rallied from its lowest levels of the day around 2708 to not far from Wednesday’s peak of 2737. Source: xStation
This is far from the first time that Trump has tweeted on the markets, although he has been less quiet in recent sessions as they have fallen lower from record highs. Throughout his tenure there has been a near constant flow of tweets from Trump on the US stock market with each near high greeted by a post taking credit for the gains due to the administration’s policies. Trump is no doubt aware that with the markets lower by around 10% in the past couple of weeks and just a matter of days to go before the Midterm he could well do with a further recovery in stocks to use as evidence of his positive impact on the economy.
It should be pointed out that the language in this latest tweet is pretty vague but there have also been positive noises from the other side of the Pacific which suggests progress is being made. Chinese Premier XI has been quoted in the country’s state media as saying shortly afterwards that he hopes China and the US can promote a steady, healthy relationship based on an important mutual understanding achieved with Trump.
Trump has regularly tweeted about the stock market during his presidency, often seeking to take credit for the strong run higher. Source: Bloomberg
Even after Trump’s not so slight intervention the outlook remains not too positive for the US500 with the market still below the 21 EMA. The 8 and 21 EMAs remain in a negative orientation and for the time being the recent gains look more like a counter trend rally rather than a longer term turning point. This bounce can obviously turn into a sustained move higher but it will need to get back above the 21 EMA (currently 2750) and also preferably print a bullish EMA cross (8 move back above 21).
The US500 is looking to post a 3rd consecutive day of gains but price remains in a downtrend for the time being according to the EMAs. Near term resistance may be found at weekly highs of 2737 but longs would ideally like price to move back above the 21 EMA (currently 2750) before they can get too hopeful that the trend is turning back higher. Source: xStation
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