Investor Alert

Oct. 14, 2019, 4:48 p.m. EDT

What individual investors can do after China and Wall Street won this round of the trade deal

The most probable scenario is that the stock market will stay range-bound

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By Nigam Arora

Getty Images
U.S. Treasury Secretary Steve Mnuchin

On the surface it appears that China and Wall Street won this round of the trade deal.

Who lost? It appears that the loser is America. China has taken advantage of the U.S. over the past 40 years. Let’s discuss a potential game plan for investors with the help of a chart.

The chart

Read: This ETF can protect you from S&P 500 volatility and enhance your long-term returns

Please click here for an annotated chart of Dow Jones Industrial Average ETF /zigman2/quotes/208954582/composite DIA +1.39% . Investors also can use a chart of S&P 500 ETF /zigman2/quotes/209901640/composite SPY +1.02% . Those with portfolios that are heavy in technology should keep an eye on the chart of Nasdaq 100 ETF /zigman2/quotes/208575548/composite QQQ +0.68% .

Note the following:

• The chart shows the highest probability zone on the upside if there is a breakout on good news either on the trade front or from company earnings.

• The chart shows the highest probability zone without a breakout.

• The chart shows the Arora buy signal.

• The relative strength index (RSI) shows the stock market can go either way.

• The chart shows the volume is higher on down days. This indicates high risk in this stock market.

• The details of phase one of the trade deal are missing. Therefore it is not possible to draw a definite conclusion.

• The Trump administration is calling the deal substantial, but it is difficult to see how China did not get the better of President Trump.

• China has agreed to buy up to $50 billion in U.S. agricultural goods. This amount is only about $25 billion more than what China would have bought without a trade deal. China needs these agricultural products to feed its population.

• On the U.S. side, this is a minuscule amount for the U.S. economy.

US : U.S.: NYSE Arca
$ 260.82
+3.58 +1.39%
Volume: 3.11M
July 10, 2020 4:00p
US : U.S.: NYSE Arca
$ 317.59
+3.21 +1.02%
Volume: 57.55M
July 10, 2020 4:00p
US : U.S.: Nasdaq
$ 263.97
+1.79 +0.68%
Volume: 32.89M
July 10, 2020 4:00p
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