New Tariffs on the Way

We knew that President Trump wasn’t going to keep sitting on new tariffs forever. Sooner or later, he was going to make good on his threat to impose another $200 billion worth on Chinese goods. The market thinks it’s coming today. However, as of this writing, there’s been no official announcement. You’ll probably know more by the time this commentary is released.

As for Monday’s session though, it didn’t matter. Just the chance that these tariffs would become real was enough to put pressure on the major indices. The market was already preparing for something this week after the President mentioned on Friday that he was willing to proceed with the tariffs...and then the White House cemented it by saying an announcement was coming after the bell.

It was actually the NASDAQ that had the worst performance on Monday...by far. Tech has been rather iffy of late to begin with, and now the market is concerned how much Apple will be impacted by more tariffs. China is one of Apple’s biggest markets, and so the world’s most valuable company slipped more than 2.6%. The index plunged 1.43% to 7895.8.

The S&P’s five-day winning streak is over, as is its stay above 2900. The index declined 0.56% on Monday to 2888.8. The Dow ended a four-day winning run with a slide of 0.35% to 26,062.1. Stocks are coming off a pretty good week that saw the NASDAQ and S&P each jump by more than 1%, while the Dow increased 0.9%.

For all the fears and uncertainties that these trade conflicts bring, stocks have been handling them well for the most part. But the market is wondering how long that can last, especially with most folks not seeing an end in sight anytime soon. And how would a new round of tariffs (and the likely retaliation) impact the possible talks we’ve been hearing about lately?

Get ready…it’s going to be another “fun” week in the market.

Today's Portfolio Highlights:

Stocks Under $10: After so many days at the front of the top movers list, it feels kind of weird to be selling Funko (FNKO). However, the shorts have finally taken a bite out of this toymaker. Just a little while ago, the stock was up approximately 250% in the portfolio, but now about half of that is gone. Brian Bolan is not interested in holding this name any longer and would like to protect the gain remaining. He sold FNKO on Monday, leaving the portfolio with a still-impressive 130% return in just about 5 months.

Counterstrike: Unfortunately, it feels like the trade conflict with China is likely to escalate before it gets resolved. President Trump stands ready to impose $200 billion in tariffs at only 10%, which leaves plenty of room for both sides to continue raising the stakes. Jeremy wants a hedge against all this uncertainty, and so he added iPath S&P 500 VIX ST Futures ETN (VXX) on Monday with a 7% allocation. If the concerns prove to be unfounded and the S&P rallies to new highs, the editor would be happy to exit this position. Read the full write up for more on this move.

Black Box Trader: This week's adjustment included three swaps. The names that were sold today included:

• 3D Systems (DDD)
• Conduent Inc (CNDT)
• OGE Energy Corp (OGE)

The new buys that replaced these names are:

• DR Horton (DHI)
• NOW Inc (DNOW)
• Keysight Technologies (KEYS)

Read the Black Box Trader's Guide to learn more about this computer-driven service designed to take the emotion out of investing.

Zacks Confidential: Knowing WHEN to buy a stock is just as important as knowing which stock to buy. Technical analysis provides the best chance to use time as an ally in your investing. Kevin Matras knows what you're thinking...TA is too difficult to understand! But Dave Bartosiak disagrees, which is why Kevin handed him the keys to this week's Zacks Confidential. Stop being intimidated by technical analysis and get three stock picks by clicking: Three Easy Steps to Stock Chart Success.

Insider Trader: "The trade jitters were back with a vengeance today as investors dumped the FAANG stocks and fled to safer pastures.

"An announcement is expected imminently outlining the $200 billion in Chinese tariffs that have been threatened for several months. Apparently, these may only be 10% tariffs and it's unclear on what items. There was some debate within the administration as to what would get hit.

"This is why Apple took a dive today because it's expected to be hit pretty hard by this round of tariffs.

"Let's see if the tariffs are actually announced today. Sometimes the anticipation of an event is worse than the actual event as far as the stock market is concerned." -- Tracey Ryniec

Have a Great Evening,
Jim Giaquinto

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