Yikes! Today President Trump's angry response to China's new tariffs on U.S. products and his demand that American companies are “hereby ordered to immediately start looking for an alternative to China” kicked the broad stock market into a tailspin. At the time of this writing (2:30 pm EDST) the DOW has lost over 500 points. In yesterday's blog I wrote:
"This market still has time, of course, to back down again for a new low in this reversal period (Aug. 21-29), but I suspect it will rally some more."
Well, given today's "China bomb", we may still see that low in the current reversal zone sometime next week. Or the market may snap back up on another comment from Trump (or some other news story). We have a bad combination now of a volatile equity market and a volatile president! We are thankfully on the sidelines for now, but still waiting for a significant top to sell or bottom to buy. We do not yet have any strong signals to encourage either trade.
It looks like today's equity plunge may have triggered a flight to the "safe haven" of precious metals. Both gold and silver prices surged strongly today. Nevertheless, we are still expecting a sharp downturn soon. That downturn may start next week from new tops in this current reversal zone. Still on the sidelines of gold and silver.