Welcome to the real world Uncle Sam!The market can withstand a lot of pressure.
It can handle:
the dawn of "fake news" and outright "lying"
the pollution and "enshitification" of social media
imperialist ideas of a Gaza takeover
partnering with a Russian totalitarian state
overhyping of AI and Nvidia's overpricing
populist politics
unworldly valuations of tech stocks
What it cannot handle is:
Upsetting the world order
Undermining of NATO, Europe, and allies
Starting trade wars with your best friends
Establishing tariffs which will harm the US economy
I love the US stock market, and US animal spirits, it's the best in the world.
But when risk rises, then secure investments like bonds/treasuries become the smart money move. Stocks become "risk off"
Risk is rising, tariffs will pressure inflation, inflation kills economies and markets.
The European defense industry will benefit, the US consumer will pay higher prices.
Higher risk, could mean a lack of confidence, and confidence powers the stock market.
Batton Down the Hatches.
Trading Note: I sold all my US holdings on Tuesday, at the break of the double top neckline (see chart).
My target price is the 2021 high, before the one-year bear market. Its a big drop, I give it a 60-70% chance.
RSI & ROC Negative Medium-term divergences
Of course this could all change if Trump backtracks on trade wars, tariffs and imperialist rhetoric.
But until then, enjoy the ride.
