S&P 500; US Indexes Fundamental Daily Forecast – Will Trump Dig In, or Give In to Party Pressure?

The price action in the stock market clearly suggests uncertainty over the outcome of the tariffs issues. The initial news drove stock markets lower because investors weren’t sure of its impact on future earnings. The reactions on Friday and Monday indicate that investors must feel that they are just part of doing business in a global economy and that the markets are just going to have to roll with it.

I think the direction of the market will be ultimately decided by when and how Canada, Europe and Asia respond to the tariffs. At first, traders thought the retaliation would be swift and decisive, however, that may not be the case because Trump may end up using the leverage of the tariffs to get a more favorable NAFTA deal.

Additionally, while the Democrats may like the idea of tariffs, the Republicans aren’t fully behind the idea. President Trump is a Republican, but he has been split from the Party at times.

Essentially, I think investors need to brace for more volatility and a possible two-sided trade over the near-term. I think stocks could plunge if Trump digs in and takes a protectionist stance. This will likely lead to the retaliation and the trade-war that investors fear.

If Trump concedes to Party pressure, or if he gets what he wants from the NAFTA deal, or if there is a delay in retaliation, then stocks could resume their recovery of last month’s correction.

The weekly chart pattern demonstrates that the March E-mini S&P 500 Index and the March E-mini Dow Jones Industrial Average futures contracts are rangebound with the price action being controlled by a series of retracement levels.

The price action also indicates investor indecision and impending volatility. Once investors get the clarity needed to pick a direction with conviction, we could see a huge move.

The main trend is up in the March E-mini S&P 500 Index according to the weekly swing chart. A trade through 2878.50 will signal a resumption of the uptrend.

The minor trend is down. A trade through 2789.75 will change the minor trend to up. A move through 2647.00 and 2529.00 will indicate the selling pressure is getting stronger.

The main range is 2415.50 to 2878.50. Its retracement zone at 2647.00 to 2592.25 is the major support. It is controlling the longer-term direction of the index.

The intermediate range is 2878.50 to 2529.00. Its retracement zone at 2703.75 to 2745.00 is acting like resistance. Overtaking this zone will be a strong sign that buyers are returning.

The short-term range is 2529.00 to 2789.75. Its retracement zone at 2659.25 to 2628.50 is acting like support.

The resistance is a little scattered, but support is pretty tight, coming in at 2659.25, 2647.00 and 2628.50.

Expect the index to continue to bounce inside the retracement zones until there is some clarity for investors. Once investors gain the confidence to trade with conviction then look for a rally to extend over 2745.00, or for a steep sell-off to begin on a sustained move under 2628.50 then 2592.25.