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My indicators are flashing sell signals this week, a downgrade from last week’s bullish readings, as the market has really rolled over during the last few trading sessions.
Certainly, the tariffs that were just announced have broad implications for the stock market. The United States has been running a trade deficit for decades, which just tells me that they are not very meaningful. We’ve had a very robust economy for years and years even with growing trade deficits all along the way.
A better way to boost the U.S. steel and aluminum industries, for example, would be for the government to provide subsidies to those industries like other countries do now. I think this would be a much wiser move than getting into a trade “fist-fight” with China. In general, as soon as the laws of supply and demand are disrupted, things start to go downhill.
Bigger picture, the S&P 500 has not been acting well for a while now, as it failed to make new highs on its latest rebound, and it dropped along with the other major indices this week. Therefore, with my proprietary indicators and the technical picture both pointing to the downside, I am now in the bearish camp and I suggest being much more defensive with your portfolios at this time.
Today I am recommending just such a bearish play on TrueCar Inc (NASDAQ:TRUE), which just suffered a downgrade from JPMorgan Chase & Co. (NYSE:JPM):
Buy to open the TRUE May 9 Puts (TRUE180518P00009000) at $0.65 or lower.
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