How to trade US stocks under high tariffs? Which industries are more suitable?

Will the $S&P 500(.SPX)$ form a double bottom?

• The $S&P 500(.SPX)$ 0 index is currently in a downtrend, approaching the previous low of 5168.98. If it can stabilize near the MA200 (5753.47) and show a rebound with reduced volume, it may form a double bottom.

• However, it is necessary to pay attention to the changes in the RSI and KDJ indicators; if there are oversold or overbought signals, cautious operations are needed.

• Changes in trading volume are also crucial; if a stabilization with reduced volume occurs near the support level, it may indicate the formation of a double bottom.

$S&P 500(.SPX)$ EPS Estimates for 2025 are now at $263.05, with a growth rate down to 10.7%. Stocks are now trading at 2x growth. Not cheap with a PE at 20.7. by @MichaelMOTTCM.

@MichaelMOTTCM

How to trade US stocks under high tariffs? Which industries are more suitable?

Trading Strategies

1. Short-term Risk Management:

   • Check Your Portfolio: If you’ve got way too many tech stocks—like more than 70%—you might want to sell some and keep some cash on the side. That way, you’re not totally exposed if things get worse.

   • Set Stop-loss Orders: Put a safety net under your stocks. If they drop by 5% to 10%, automatically sell. It’s like having an emergency brake to stop losses from getting out of hand.

   • Don’t Chase the Market: When everything’s crashing, it’s tempting to buy low. But tariffs can mess up the market for a long time. Wait it out.

2. Medium-term Defensive Positioning:

   • Go Defensive: Shift some of your money into safer sectors like utilities ( $Utilities Select Sector SPDR Fund(XLU)$ ), telecom, and everyday stuff like food and household items ( $Consumer Staples Select Sector SPDR Fund(XLP)$ ). These won’t skyrocket, but they’re less likely to tank.

   • Dollar-Cost Averaging: Instead of putting all your money in at once, spread it out over time with something like the $SPDR S&P 500 ETF Trust(SPY)$ or the $Invesco QQQ(QQQ)$ . It’s like spreading peanut butter evenly on bread—less risky.

   • Keep Some Cash Handy: Hold on to 20% to 30% of your money in cash. You never know when the market will stabilize. If the $Cboe Volatility Index(VIX)$ (that’s a fear index) drops below 20, things might be looking up.

3. Long-term Quality Asset Allocation:

   • Stick with the Big Tech Winners: If you’ve got stocks like $NVIDIA(NVDA)$, $Alphabet(GOOGL)$, or $Microsoft(MSFT)$ , hold on to them. They’ve taken a hit, but they’re still solid. Tech is the future, and these guys are the leaders.

   • Look for Bargains: When the dust settles and everyone’s less panicked, start looking at other tech stocks that got dragged down unfairly. There could be some great deals.

Suitable Sectors

1. Defensive Sectors:

   • Utilities: Think electricity, water, gas. People need these no matter what. They’re boring but safe.

   • Telecom: Everyone needs phone and internet. These companies are pretty stable.

   • Consumer Staples: Food, soap, toilet paper—you can’t live without them. They won’t make you rich quick, but they’re reliable.

   • Healthcare: Companies like $Eli Lilly(LLY)$ and $UnitedHealth(UNH)$ are doing well. People always need healthcare, so these stocks are pretty solid.

2. Technology Sector:

   • Semiconductors and AI: Tech is tricky, but it’s also where the big gains are. If you’ve got some extra cash and a bit of a gambler’s spirit, look at semiconductors and AI. Stocks like Nvidia and Google are still worth holding if you believe in the long-term tech boom.

   • Autonomous and Controllable Tech: With all the tech competition going on, countries are pushing for more homegrown tech. This could be a big opportunity.

3. Sectors to Avoid:

   • Discretionary Consumption: Cars, clothes, furniture—stuff people can live without if times get tough. These sectors can get hit hard.

   • Cyclical Sectors: Think heavy industry, metals, mining. These are the first to suffer when the economy slows down.

Summary

In a high-tariff world, you’ve got to balance safety and potential growth. Keep some cash, invest in safe sectors, and don’t forget about those tech leaders. Keep an eye on what’s happening with tariffs and the economy, and be ready to shift gears if things change. It’s like driving in bad weather—stay cautious and keep your options open.