Two major events of yesterday are worth highlighting:
The first one relates to the implementation of the previously announced initiatives by the new US administration to impose new trade duties. It has been stated that several weeks or even months are needed to conduct a number of studies to determine the impact of these trade duties and the optimal settings for them. In other words, Trump's loud statements about imposing duties during the election campaign were probably just a slogan without any predetermined analytical plan.This suggests that the outcome of the current study is likely to be a much more modest package of measures, introduced very cautiously and over a long period of time. The realization that Trump's promises often turn into a tool of bargaining, and sometimes just into nothing, made the stock market extremely excited yesterday. As traders joke now, of all the initiatives announced by Trump only the renaming of the Gulf of Mexico has been achieved so far.
The second event is that January's Producer Price Index (PPI) was lower than projected. A few of its components, which are also factored into the Personal Consumption Expenditures (PCE) price index — the Fed's preferred inflation gauge — were more positive last month, posting declines in the cost of healthcare and air travel.
The S&P 500 index started to break upward on the news. Breaking through the highest price level and heading towards 6,185 is a probable target. For a better profit/risk ratio, it is preferable to enter a deal to buy the S&P 500 index from the level of a potential correction to 6,100.
The overall recommendation is to buy the S&P 500 index.
Profits should be taken at the level of 6,185. A Stop loss could be set at the level of 6,000.
The volume of the opened position should be set in such a way that the value of a possible loss, fixed with the help of a protective Stop loss order, is no more than 1% of your deposit funds.
This content is for informational purposes only and is not intended to be investing advice.
