Momentum Monday – Climbing the Chinese Wall of Worry

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Markets tend to overreact to known threats. Chinese stocks have been under severe pressure for the past six months. Most of them had a 30-50% correction. The big question this week is how much of the tariff talk has already been discounted. We are likely to find out soon. Technical bottoms are often formed when a beaten-down sector rallies on bad news.

In the meantime, U.S. stocks continue to lead the world financial markets. All major U.S. stock indexes are currently consolidating in a range. Small caps and large-cap tech stocks’ momentum seem to be losing steam, so there are no reasons to be overly aggressive on the long side right now.

On Momentum Monday, we cover QQQ, FXI, AAPL, GOOGL, ECHO, IYT, among others.

BTW, I just released a new book: Swing Trading with Options – How to trade big trends for big profits. It’s available digitally and on paper (it features more than 100 annotated colored charts on big 8×10″ format).