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Two Ways: China Fighting Back


Strengthen your portfolio in good times and bad.


Trade Wars Beginning?

China is retaliating after the US imposed trade restrictions on the world's third-largest economy. According to the Wall Street Journal, China said it would cut off US imports of chicken and auto products after the Obama administration said on Friday that it was imposing tariffs on Chinese tires.

Some are saying the ties between the countries are likely to remain unharmed. But other observers are concerned about the possibility of future trade protectionist moves.

Further, Chinese tires account for nearly 17% of all tires sold in the US, hitting cost-conscious consumers already dealing with high unemployment and a fragile economy.

From the Bull Pen: There's nothing bullish about potential trade wars just as the global economy begins its recovery. But bulls can look to China Mobile (CHL), which remains in an uptrend. One can fade (read: buy) weakness into its 200-day moving average (currently $48.30). A sell stop can be set below that level.

From the Bear Cave: Parabolic moves could lead to parabolic declines. If you're bearish on Chinese stocks, keep an eye on Baidu (BIDU) for a possible double top sell signal at $380. But first watch for confirmation of the failure. High volume would be especially enticing. Upon entry, if and when confirmation happens, remember to set a buy stop 2% above entry.

Quick Check Around the World

Asian trading closed with the Nikkei -2.32%, India -0.31%, Hang Seng -1.08%, Shanghai 1.24%, and Taiwan -1.09%.

Across the pond, we see the FTSE -0.67%, CAC -0.93%, DAX -0.81%

As of 8:10 a.m. EST, S&P Futures are trading -7.25 to 1030.00 and Nasdaq futures are -12.50 to 1671.00.

A Look at Commodities

Over in commodities, crude oil is -0.55 to 68.74 while gold is -8.50 to 9983 this morning. Silver is -0.28 to 16.42 and copper -5.650 to 277.10.

The dollar index is +0.2400 to 77.1300.

No economic events today but click here for the full trading radar.

Have a great day!

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No positions in stocks mentioned.

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