Compared to typical May trading over the recent 21-year period, this May has veered off course earlier than usual. On the first trading day of the month, the Fed harshly squashed budding hopes of an interest rate cut and the viewed was confirmed on the second trading day leading to DJIA, S&P 500 and NASDAQ losses on the first and second instead of typical mild average gains. The market did enjoy a brief rally on the third, but it came to a crashing halt as attentions shifted back to trade negations with China. The implementation of 25% tariffs last Friday was initially overlooked, but the realities of the increasing probability of an extended and tumultuous negation process with China (not to mention another flare-up in the Mideast tensions) are hitting the market today. Should the S&P 500 finish the day down more than 1.9%, it will be the second worst day of the year. Only January 3, 2019 was worse, off 2.5%. If mid-May strength fails to materialize, the second half of May could be worse than the first half.
As always, please use protective buy and sell stops when trading futures and options.
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