The Trump administration is considering a plan to block a wide array of software exports to China—everything from laptops to jet engines is on the table. This is being pitched as a direct counter-punch to Beijing's new restrictions on rare earth metals. Meanwhile, the US dollar is gaining strength against other major currencies as traders wait on the delayed US consumer inflation data.
This reading is likely to show relative growth—a development that would typically give the greenback a boost but weigh on the stock market. The S&P 500 Index (SPX) has been on the back foot since early October, with sellers testing the $6,550 support three times already. In each round, the market has recovered.
Adding to the uncertainty, the US is still dealing with a lack of official economic data, as the government shutdown drags into its 23rd day. The Consumer Price Index (CPI) is finally set to come out on Friday, over a week late, while other key reports like the monthly jobs one were never released. Such an information vacuum is putting pressure on both US and global stock markets.
If this pessimistic mood holds, SPX is likely to make another run to the $6,550 support. This time around, though, any break below could be more serious, with the potential for the index to settle down and consolidate beneath that key technical level.
The overall recommendation is to sell the S&P 500. Profits are taken at $6,550. Stop loss is set at $6,800.
Calculate your open position so that a potential loss (protected by a Stop Loss order) is limited to 1% of your deposit. If your account balance does not allow entering a position of this size, it is better to skip the trade and wait for other market signals that meet low-risk criteria.
This content is for informational purposes only and is not intended to be investing advice.
