Tariff Panic Strikes. Watching. Waiting. Trading One Stock at a Time – One Day at a Time.

Days like today test all of our patience. But in a data heavy week, today's volatility may well be quickly forgotten.

Stocks are heading south this morning and although it’s still early in the day, support levels are being tested as fear is rising. The CNN Greed/Fear Index opened the day at 40 and could well go lower. On the other hand, the U.S. Ten Year Note yield (TNX), the New York Stock Exchange Advance Decline line, and the major indexes testing key support as the data heavy week unfolds.

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It’s hard to be bullish when all we see is red on our trading screens. So, I’m not bullish. It’s days like this that make trading stressful. Yet, over the years, I’ve learned that these days do pass and that well constructed portfolios will survive. As a result, I am watching as things develop and allowing the market to take me out of positions by hitting my sell stops while simultaneously waiting for things to settle down as I look for areas of the market which are showing relative strength.

As I noted this past weekend, the market was set up for an increase in volatility. So what’s next? I suspect we will see more volatility in the short term, which means that keeping an eye on support levels is crucial.

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The New York Stock Exchange Advance Decline line (NYAD) is testing its 50-day moving average with the RSI testing 50. We may see a breach of these two important levels before the day is out. Let’s see how things develop here.

The U.S. Ten Year Note yield (TNX) is testing the 4.5% yield area as bonds are torn between potential tariff related inflationary effects and a flight to safety. A break below 4.5% would likely be a positive for stocks although it could take some time for this to develop.

The S&P 500 (SPX) has broken below 6000 and its 20 and 50-day moving averages and could well test 5800 before things get sorted out. On the bright side, as I write the market is off its lows for the day, although there is no guarantee that this bounce will last. Certainly a lot can happen over the next few days as this is a heavy data week culminating with the employment data on Friday. Already, this morning’s manufacturing surveys delivered some positive news.

Bottom line: It’s Going to be a Long Week. The next few days could well be pivotal with the odds being equal of this turning into a full blown correction versus a short term blip and a buying opportunity.

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