Tariff Tantrum

The news is hyping a potential trade war between the US and China.  There has been nothing passed, and corporations will have a chance to bring up complaints in May before a final determination on the tariffs.  In other words, these tariffs will have very little bite and will serve to just placate Trump's voter base without doing anything for increasing demand for US manufactured goods.  But in this kind of market, its shoot first, ask questions later. 

We've already had many selloffs on this trade war theme for the past several weeks.  After a while, it gets stale and unless something more concrete and meaningful comes down the pipe, the market will move on to the next worry.  What is more worrisome is how heavy tech stocks have traded.  That is what has kept the broader market in an uptrend.  But it seems like we've finally gotten to such high valuations for the big cap tech names that they just don't have much lift anymore.  They are no longer speedboats that can spurt higher.  They have become crowded cruise ships that move slowly and get easily bogged down. 

Today's price action after a big gap down seems to point to a market that is oversold and looking to have a counter trend bounce.  However, I don't see a long lasting uptrend off this low.  Perhaps a 2-4 week bounce.  I doubt a bounce can last for more than 6 weeks.  The market is too saturated with weak hands and retail longs to keep going higher for months on end like it did in the past.