The fear of trade war between US/China has subsided with potential negotiation between 2 countries, ending the first episode of political economy drama. Logically, win-win is better than lose-lose for these 2 biggest world economy. This is a mind game (testing of patience, strength, flexibility, communication, etc), recent threat of trade war may not be the last move, more similar moves may be expected in near future episodes of political economy drama, stirring up the market volatility, creating opportunity for short term traders.
Despite short term recovery in global stock market, Dow Jones Index is still below 25000 points, S&P500 is still below 2700 points. The stock indices have to be above these 2 critical short term resistance to reestablish the upward trend with additional help of more positive monthly macroeconomic news in near future. In the short term, either “Double Top” or “Double Bottom” patterns may be formed. A short term trader would follow the market trend, considering both support and resistance, not just hoping for a future which is unpredictable.
Volatility is a friend for a trader (buy low sell high), an enemy for a value investor (buy low and hold long term). Use the market volatility to your advantage by aligning with your personalized trading or investing strategies.
Political economy drama is inherent within stock investment. The person in power may need to make decision with a complex process of considerations, aligning personal interest with own supporters at national level. Think in the shoes of these politicians. Do they want to destroy the global stock market and eventually economy? This is as if hitting own feet with big stone. However, sometimes there could be black swan event which may be beyond control of these political superpowers, a stock trader has to be responsive to any major change in market signal.
There are similarities in investing at business level (businessmen) vs country level (politicians). Learn further from Dr Tee on analysis of political economy drama which is reflected in global stock markets.
