On March 26, U.S. President Donald Trump signed an announcement at the White House declaring a 25% tariff on imported cars. The measure will take effect on April 2. Trump emphasized that the tariff would be permanent, adding that cars manufactured within the United States would be exempt from the tax.
Trump's statement quickly triggered backlash from U.S. trade partners, including the European Union, Canada, and Japan.
1. Where is the Support Level for the Second Phase of the U.S. Stock Index Decline?
Recent analyses suggest that the U.S. stock index rebound seen earlier was merely temporary and not indicative of a full recovery. In fact, the rebound was weaker than expected, reinforcing the likelihood that February's peak will remain the high point for the year. Given the renewed downward trajectory, achieving new lows appears inevitable. The next significant support level is expected near the 20-month moving average, which serves as the dividing line for long-term market trends in the U.S. stock index.
Historically, significant breaches of this moving average have been linked to major events, such as the 2008 financial crisis, the 2020 COVID-19 pandemic, and the 2022 Federal Reserve's aggressive interest rate hikes. For the current decline, the strong support level at the 20-month moving average is estimated to be around 5,300 points.
2. Predicting the Bottom of the U.S. Stock Index
The U.S. stock index this year continues to follow familiar timing patterns. After peaking in February, the next critical time point will be May. This suggests that the market in April will remain turbulent, largely due to the proximity of the aforementioned strong support level. Consequently, stock market volatility is expected to intensify.
It is anticipated that the Federal Reserve will resume interest rate cuts in June, which may lead to speculative activity in May, driving a significant weekly rebound in the U.S. stock index. The 20-week moving average will likely act as a strong resistance level during this period. Traders with a higher risk appetite can consider bottom-fishing between 5,300 and 6,000 points if the index quickly dips to these levels in the next two weeks. However, it is crucial to note that the rebound process will likely remain volatile and challenging.
3. Precious Metals: Look for Speculative Opportunities in Secondary Gains
Gold prices breaking through the $3,000 mark and accelerating to new highs were expected developments. Short-term speculation remains viable, while long-term investments are best approached after a sharp price correction. As for related commodities like silver, the main strategy remains to wait for pullbacks before attempting to capitalize on secondary gains.
For those inexperienced in short-term speculative trading, it is recommended to buy options instead. When silver prices surge, take profits promptly and avoid holding positions for too long at elevated levels. Large price fluctuations are likely during rapid adjustments, emphasizing the importance of patience and proper timing to re-enter the market after corrections.
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