New alignments: Palladium
Another trading day and more tweets. The White House's announcement to impose 5% tariffs on all goods imported from Mexico beginning June 10, and a gradual increase to 25% until the flow of undocumented immigrants across the border stops address one problem while creating another one. Goods from autos to food will be costing Americans more, but it's likely that the tweets will be telling us how the US coffers are filling up from money from Mexico (as the Mexicans pay). Expect the tariffs to slam the oil market too.
Execution of the tariffs will be a dangerous move the United States teeters on the brink of the recession already. Recessions are normal, but depressions are a result of policy mistakes. Continuation down the confrontational path of negotiation will be considered a policy mistake by history. Torpedoing the US Mexico Canada trade deal, signed last year as replacement to NAFTA after months of difficult negotiations, won't be viewed as shrewd policy or leadership. Obviously, the tariffs still need to be enacted, but how many can honestly say Mexico will respond favorably to this tactic? Don't include me. The reaction in the US stock market tells us more than any talking head.
Palladium, a market smashed in March, has returned to alignment. Let's see if there was enough energy accumulated during the correction to fuel another rally. Palladium would need to take out its high to generated an all clear signal.
Using the Matrix
The value of the Matrix is far more than a study of price. Trends are a function of price, volume (force), volatility, and TIME. The order of their importance is as follows: (1) TIME, (2) volatility, (3) volume & price alignment. Volume and price alignment, a setup that triggers action, favors Grade A & B, early cycle markets under high compression (↓COM). ↓COM suggests extremely low volatility, a quiet trend ready to explode into high compression (↑EXP). Weekly and monthly breakout signals are not finalized until the end of the week and month, respectively. Signals generated before that could be temporary. Keep this in mind when reading alignment.