There can be volumes written about this trade war situation. My objective is to assess the stock market reaction. Here’s how the last few days went down as we talked about the SPDR S&P 500 ETF (SPY) in our Trading Room, writes Hugh Grossman, founder of DayTradeSPY.
Monday, March 31: SPY shot up to pare recent losses, enthusing investors, despite President Trump’s assertion that “you’d start with all countries.” The market was stoked as he also said the tariffs would be more generous than trade partners had been to the US.
Tuesday, April 1: The S&P 500 edged higher, awaiting "Liberation Day" after a volatile session.
Wednesday, April 2, 4 pm: Trump opened up; SPY shot to a weekly high. Then he presented his infamous chart, and all heck broke loose.
SPDR S&P 500 ETF (SPY)
As of Sunday, the US stock market had seen $9.6 trillion in value erased since Inauguration Day. Last Thursday and Friday alone saw a market value of $5 trillion wiped out.
We came precariously close to triggering the first circuit breaker last week, which would have halted trading that day. Investors were not impressed. That said, we knew there would be a point at which investors would recognize a buying opportunity and return to the market.
Wednesday in the Trading Room, my colleague Jon noted a strong technical support level on SPY and discussed the possibility of the ETF heading substantially higher, but requiring a catalyst. We discussed Trump’s “Art of the Deal,” his modus operandi, and how SPY was poised to snap up.
Lo and behold, true to form, at 1:19 pm, the announcement of holding off on tariffs for 90 days was the stimulant we were awaiting. SPY shot up more than 48 points in a matter of minutes, and so did our calls!
Jon and I comment on situations like these every morning in the Trading Room. If you had been involved in it, you could have bagged a 500% gain.
