Finally, we are starting to see a little fear on Wall Street. Yes, this could be the perfect storm. After all, we have yields rising on the 10-year U.S. Treasury Note, U.S.–China trade wars, a stronger U.S. dollar, weak emerging markets and a never-ending investigation against President Trump. There are even more worries in the pipeline, but these are probably the most important concerns that affect the stock market.
Traders and investors must now be patient and start to look for the potential opportunities to arise. We have to realize at some point that the Federal Reserve will probably stop raising interest rates. Eventually, the United States and Chinese governments will come to some type of agreement on trade and intellectual property as both countries rely on each other for economic growth. The emerging-market economies will find a bottom sooner or later, but this will probably be dependent on currency, interest rates and a few other factors. As for the investigation into the Trump administration and Russian collusion, while it gets more bizarre by the day and actually seems far fetched at this stage, it is still a wild card for the markets.
The corporate tax rate in the U.S. is 21.0 percent, which makes the U.S. one of the most competitive countries in the world now. Once the above and other problems have some clarity and resolutions, the American markets should continue to expand. Now please understand, if these problems are not solved, there could be some real repercussions out there for the stock market. Until then, stay nimble and look for the charts that are signaling a bottom. After all, the S&P 500 is about 4.0 percent off recent highs and is still positive in 2018.
SPDR S&P 500