Jeff Bishop’s Total Alpha Program | Navigating the Tariff Trade

Make no mistake about it, there has been a lot of talk about tariffs this year—learning more about them will only make you a better trader. After all, it never hurts to understand the headlines driving the market.

Why?

Because trading off the wrong headline can cost you money.

For example, stocks came off all-time highs last week but fizzled after it appeared that we wouldn’t be close to reaching a trade deal with China.

So when the sell-off hit Monday, I stepped in to buy the market for a quick trade.

This was the view of my Total Alpha account midweek

But before I get ahead of myself, and explain how you can profit off the tariff news. It’s important that we go over the basics first, understand what tariffs are on what their impact on the global economy is.

Tariff 101

Chances are you haven’t heard the term tariff thrown around this much since you studied American History in high school.

Remember the Boston Tea Party? A little tariff imposed on America was one of the few triggers that started the American Revolution…3 pennies per pound.

Well, brace your yourself. It’s the end of the decade and the future in front of us seems to hold new tariffs as well as a war of the trading variety.

A tariff is a government tax on imported goods. The result is the price of foreign goods gets higher.

The usual reasoning behind tariffs is that countries use them to either limit imported goods or to even out the pricing between foreign and domestic products. Sometimes both.

Why Is Tariffs News Now?

The U.S President made plans to hike tariffs billions of dollars’ worth of China’s imports, steel imports from Japan, Eastern Europe, and several other countries, as well as threatened tariffs on German autos. He delivered these under the authority granted to him under the heading of national security risks. This even extended to American dairy.

Chinese imports undercut two major industries in the U.S. The result is the U.S. margins are getting driven down constantly and the U.S. market is flooded with China’s goods. There’s also been an ongoing issue with intellectual property theft that’s been a headache for decades.

The belief behind the tariffs is two-fold. First, it evens the playing field for subsidized industries in other countries, including Chinese businesses. Second, it provides leverage for the administration to demand controls on intellectual property theft.

Deep In Bed With China

Last year the U.S. imported $540 billion worth of goods from China. A majority of what we imported were cellphones, computers, and what’s on your body and feet. In return, China imported only $120 billion of U.S. goods. Putting a spotlight on how far from a 2-way street we are. And this has been happening for years!

To top it off, China OWNS 28% of the U.S. debt it owes to foreign countries, making it one of the largest foreign investors in U.S. treasuries.

But wait, there’s more! As of this spring, China owned $1.1 trillion of the U.S. debt.

The Tariff Effect

So, what do these tariffs mean for us, billions of dollars on Chinese goods?

Initially, it raised prices on most consumer goods. I expect retail prices to climb, causing sales to drop. Low wage growth makes exacerbates this dilemma.

But American companies can’t keep up with the low prices of Chinese products. Labor costs make China more competitive for resource-intensive goods. They are forced to choose between lower margins or finding cost offsets.

Yet we may not be able to handle the demand. U.S. steel production has declined over the last 50+ years. That reduced overall production capacity. It’s not a simple matter to turn on production that offsets the imports.

Brace Yourself

For years and a couple of presidents, Americans were told more jobs are coming. But with higher tariffs looming, many companies would rather cut costs at home than pass that cost on to the consumer. This means fewer jobs which adds fuel to speculation of a possible recession.

In the meantime, everyone is waiting to see if December tariffs get signed. There is a very real chance they won’t be, at least this year, mainly due to the impending election year on our heels. These tariffs could hurt our president’s reelection odds if things take a turn for the worst.

There is no deadline set for the trade deal, just that it will be completed when the president is good and ready.

China isn’t the only country in the cross-hairs of tariffs of the future. Brazil and Argentina are potential targets. Just this month our president tweeted “Brazil and Argentina have been presiding over a massive devaluation of their currencies. which is not good for our farmers. Therefore, effective immediately, I will restore the Tariffs on all Steel & Aluminum that is shipped into the U.S. from those countries.

How to Navigate

Steel companies leveraged to U.S. production benefit from protectionist measures. Make sure you understand which ones manufacture in the U.S. versus outside. Those with greater global exposure are more unpredictable.

Chinese American Depository Receipt (ADR) trade directly with the hopes of a deal. Companies like Alibaba and JD.com move higher on lower tariffs. Lower tariffs increase U.S. consumption of Chinese goods. This leads to higher GDP outputs, which in turn drives growth in these Chinese companies.

It remains unclear if the U.S. economy will sustain long-term damage from the tariffs. So far, it’s shown solid growth in the face of global stagnation. For now, I focus only on news that states a deal is or is not done, and nothing in between.

Catch the trades in real-time

Total Alpha members get to watch how I play these minute by minute. They saw me crush a $71,000 trade just the other week.

Click Here to Join Total Alpha (watch this webinar – BEST OFFER HERE!!!)

Source: TotalAlphaTrading.com | Original Link

The TradeSmith Deadly Decade Live Event

Keith Kaplan, president of TradeSmith is hosting an event on Wednesday, Dec. 11 at 8 p.m. Eastern — the TradeSmith Deadly Decade event.

At this live online event, you’ll meet “Trader X,” the mastermind TradeSmith has been working with in secret for the past two years.

You’ll also find out about the “investing super project” TradeSmith has been working on since January 2018…

As we lift the curtain on this huge new project and the identity of “Trader X” at the same time.

Again, this is going to be a critical 90 minutes. Below, you’ll get a taste of what’s in store.


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From a financial health standpoint, it could be the most important (and profitable) time investment of the year.

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Jeff Bishop’s Total Alpha Program | Midweek Market Update (12/5/2019)

Congratulations, you’ve almost made it through the trading week…and what a roller coaster ride it’s been! Let’s get you squared away with where things stand after some wild market action with the midweek market update.

The SPY managed to fill the gap today left open from Monday’s massive decline. That comes after a sharp reversal Tuesday that took most of the day to play out.

SPY hourly chart

Earlier this week, I said I expected the market to make its way to the hourly 200-period moving average…which is exactly where it stopped. And I will put my money where my mouth is.

Total Alpha Portfolio midday yesterday.

That’s why I look at the other markets, including Bonds, Gold, and the Dollar, for additional information.

Equity winners – Small caps, energy, utilities, and consumer staples

As I outlined at the beginning of this week, I expected small caps to outperform the broader market. The weekly close above the trading range that bound it all year told me it wants to move higher.

IWM weekly chart

We’re already seeing the IWM outperform the SPY by 0.15% in the last three days. That’s come at the expense of the QQQ, which underperformed by 0.32%.

The real high flyer comes from the least likely of places. Energy stocks (XLE) are down a paltry 0.36% compared to the SPY 1.02%. Much of that comes on the back of rallies in both natural gas and crude oil.

XLE hourly chart

Crude oil itself is up 5.17% this week. However, it finished down 4.75% last week when the SPY gained 0.75%…so it’s really just playing catchup and adding a bit to the top.

Natural gas looks more like an oversold bounce. The commodity fell a whopping 17.09% last week, creating a pop this week of 3.97%. It’s got a very long way to go before it shows any semblance of strength.

Utilities continue to perform well alongside bonds. The cheap yields in treasuries force safety investors to search for return, which often drives them into high dividend stocks.

XLU hourly chart

Those with a little more risk tolerance tend to stick with consumer staples. They may have smaller dividends, but offer more exposure to growth.

XLP hourly chart.

Safety Trade Outperformance

Bond ETFs also performed exceptionally well off the back of equity declines, up 1.2% for the week.

TLT hourly chart

This is a crucial hint. For the majority of the year, bonds and stocks traded together. We only saw them decouple and trade opposite one another this week (historically normal behavior).

Following a close second are the gold ETFs. GLD climbed 1.17% this week so far.

GLD hourly chart

Poor performers – The Dow, transports, and the dollar

The biggest loser this week so far has been the Dow Industrials (DIA). Though a small index, it’s down 1.58% on the week.

DIA hourly chart

The real loser this week has been transports. They’ve been just obliterated. The IYT ETF is down 2.88%, nearly double the Dow’s performance.

IYT hourly chart

This could be a harbinger of doom for any Dow theorists.

The real head-scratcher is the dollar. No matter when you looked, the dollar had been the strongest performing area week after week, month after month. So it’s a bit shocking to see it down 0.68% on the week.

UUP hourly chart

That may not seem like much to you. But it’s almost a third of the monthly range.

Go no-where – Healthcare 

Here’s an oddball for you. Healthcare stocks are flat on the week. It’s impressive given all the political drag this sector has.

XLV hourly chart.

Most volatile – The VIX

Last week, the VIX printed prices under $12. That’s extraordinarily cheap…and it indicated complacency among investors. It’s not a surprise that the VIX shot up nearly 41.77% at its peak this week, while still settling up 16.63%.

VIX hourly chart

My analysis – we’re heading lower before we head higher

Let’s look at the facts:

  • Equities haven’t seen a selloff since…well it’s been a while
  • Investors didn’t buy enough protection
  • Stocks rose on little volume
  • Now, the VIX shoots through the roof, and all the safety trades outperform
  • But the dollar is noticeably weaker

It’s pretty clear that we’re seeing money move into the safety trades after a monster run. However, even though the volume on the downside was much higher than the upside, it’s still pretty light.

Outside of a news event, we’ll likely float sideways to higher through the end of the week. From there, I expect we’ll see one last push lower before we get our Santa Clause Rally.

How I plan to profit these next two weeks

That’s for me to know and Total Alpha members to find out. There’s plenty of egg nog…so pull up a chair.

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Source: TotalAlphaTrading.com | Original Link

Trump Just Gave Us a Big-Money Buying Discount

By Jason Bodner, editor, Palm Beach Trader

It’s not often I see a profitable setup in the markets like the one I’m seeing today. Let me explain…

On Tuesday, President Trump appeared to pour cold water on any pending resolution to the U.S.-China trade war.

During a NATO press conference in London, the president said: “A China trade deal is dependent on one thing: Do I want to make it?”

Then, he added: “I have no deadline… In some ways, I think it’s better to wait until after the election, if you want to know the truth. But I’m not going to say that, I just think that.”

Now, with Trump, you can’t tell whether he’s blowing smoke or stating official U.S. foreign policy. And for our purposes, it doesn’t really matter.

But his words do matter to the markets.

Soon after his comments, the S&P 500 dropped 1.3%… the Dow 1.5%… and the Nasdaq 1.48%. His words also hit one sector in particular – which dropped nearly 2%.

Here’s the thing… My stock-picking system recently picked up big-money buying in this same sector. And the last three times this happened, we saw average returns of 26% in about 12 months.

Today, I’ll tell you which sector it is – and why you should buy this dip…


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The “Agnostic” Stock Picker

I spent nearly two decades as a Wall Street trader at firms such as Cantor Fitzgerald. In fact, I was one of only a handful of people in the world who could trade $1 billion or more for big financial institutions.

Now, I couldn’t track the big money alone. So I coded computer programs to help. And when I left Wall Street, I decided to build my own stock-picking system. It cost me over $250,000 and years of my life… But it’s proven to work over and over again.

Here’s what it does…

It scans 5,500 stocks every day, using algorithms to rank each one for strength. It also looks for the signs of big-money investors. And when it sees them moving in or out of a stock, it raises a yellow flag.

Then, I put these yellow flags through another filter. If the flag turns red, it means the big money is selling. If it turns green, it means the big money is buying…

It’s that simple: When I see green, the big money is buying.

The beauty of my system is, it’s completely agnostic. It doesn’t panic. It ignores tweets, headlines, and noise. It doesn’t sell on fear or buy on fantasy.

It just follows the money…


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Riding the Green Wave

Now, the chart below shows the Financial Select Sector SPDR Fund (XLF). It holds 67 of the top financials companies.

The green bars show when big buying has started. When the big money comes to play, it means big gains ahead.

The green bars appear when there’s more than twice the normal average of buying in a stock. As you can see, my system triggered on November 8. So the big buyers are back to play.

And the last three times XLF triggered my system, it marched higher. The average return a year later was an astonishing 26%.

Instance

Date

XLF One-Year Return

1

8/3/2016

33.6%

2

11/15/2016

23.2%

3

2/6/2019

20.7%

4

11/8/2019

?

 Average

25.8%


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And as I mentioned, President Trump just handed us a gift.

You see, financial stocks suffered a broad sell-off on Tuesday morning as trade-war fears sent the 10-year Treasury yield toward its biggest decline in over three years. Investors panicked, giving us an even better entry price into XLF. It’s been down as much as 2.8% since December 2.

But my system doesn’t care about any of that. It looks at one thing and one thing only: big institutional buying. And we’re seeing it again.

Financial stocks are headed higher in the coming months. So take advantage of this setup and add some financials to your portfolio today.

If you want broad exposure to the sector, consider XLF. It’ll position you for a possible 26%-plus return by this time next year.