Happy Liberation Day! I think?

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Are tariffs good? Are tariffs bad?

I have no idea.

I have two economics degrees and no one in academia ever made a compelling argument for either.

Some people say they suck. Some people say they’re great.

I do know, however, that the price of imported goods in Brazil are astronomically higher than they should be.

And I know that because I’ve lived here for the last six years.

I call Brazil the land of the minor inconveniences.

It doesn’t suck living here. But I sure don’t feel good paying $350 for a pair of Nike’s that should cost $125.

Or an iPhone which should cost $1,200 but down here costs $2,500.

Fun fact: there’s a thriving business down here where people will fly to Miami, buy as many Apple products as they can, stuff them into their carry ons, pray to God they don’t get stopped at customs when they return, and resell everything.

And let’s not get started on things people actually need, like cars.

Want the new Toyota Camry? Prepare to pay closer to $40,000.

Need to finance that? You’re looking at anywhere between 15-20% interest rates.

That’s why when my good friend Nick Tomas wrote an article on the history of American tariffs, I dove into it.

You can read that by clicking here.

It left me with a little more understanding of the historical precedence that tariffs have had on America.

And that’s cool.

But what I’m ultimately concerned with is how the markets are going to react to Liberation Day.

And we’re still a long way off from saying this bull market in US equities is back.

Both the S&P 500 and the NASDAQ are trading below last year’s key levels.

They’re also trading and trending below their 200-day moving averages for the first time in this cyclical bull market.

Is this an area of the market where the legends of Wall Street that we’ve read about would be buying stocks? Not likely.

And if we compare the two potential tops in SPY and QQQ against two of the most important cyclical areas of the market, we get an even clearer picture.

Both Semiconductors and Homebuilders, the two earliest leaders out of the bear market bottom back in 2022, are attempting to complete a topping pattern.

Again, like SPY and QQQ, SMH and ITB are trading and trending below their 200-day moving averages while hitting lower lows.

You can paint this however you want.

But there is no bull market without these two groups performing well.

If buyers step in here and protect the summer 2024 lows on both charts, I think there’s an incredible opportunity for a powerful reversal to the upside.

On the other hand, if they roll over here, the broader market will likely go with them.

Bluntly put: there is no bull market in the United States without these groups participating constructively.

I’m open to either side. I’m ready to buy the pivot higher, when or if it comes.

But I’m leaning bearish here below the 200-day moving average and the summer lows.

Until the narrative changes through price, I’ll continue to look for tactical shorts in the US market while buying the strongest stocks outside of the USA.

Which, by the way, ended up being one of the best quarters in the last decade for international stocks against US stocks.

We’re going to talk about all of this and more tonight @ 7PM EST during our Monthly Market Blueprint.

These are the most important sessions we have. I encourage you to be there if you can because we have a lot to talk about.

See you tonight!