The news that President Trump was exonerated should have sparked a rally in the S&P 500 ETF (NYSEARCA: SPY). It did not.
That is a glaring bearish sign of good news - bad action. When you expect up and get sideways you know there's something else pushing the other way.
We think the market is about to start pointing lower. The trade news that Trump plans to extend tariffs even after a deal is signed with China is underappreciated. Tariffs have slowed down tech spending and the extension of those tariffs should continue to slow down tech spending.
Meanwhile, many semiconductor companies, including Micron (NASDAQ: MU) last week, are expecting a pickup in the back half. That's despite seeing a slowdown currently. The extension of tariffs will likely offset and push-out those expectations.
Technically we think we're about to point lower which will match fundamentals which have been slowing, a la Micron last week. Why do I focus on Micron? Because memory is in pretty much everything tech. For me, it's a tech bellwether and when you have revenues falling off drastically that's another data point that tech's not that strong.
And when you have companies continue to keep expectations high despite the slowdown more risk is building.
With fundamentals down and technicals about to point lower now, be careful.
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