BULL TRAP WARNING IS SET AFTER TRUMP SHARES FALSE HOPE...
In a Nutshell
Markets are consolidating higher amid Middle East talks, but Trump's optimistic Strait of Hormuz statement risks a bull trap, as he often pumps equities short-term before retracting and letting oil prices rise. Avoid impulse trades on his tweets; base decisions on data, especially with Wednesday's critical PPI report and FOMC pause (98% likely), followed by Powell's likely non-bullish press conference. Stay cautious, skip leverage, and tune into live streams for the events.
These notes were generated by AI and may contain inaccuracies.
Markets are pushing higher today, possibly due to developments in the Middle East. NASDAQ market shows consolidation: ripping up, giving it back, then going back up. On larger time frames, markets found support at the previous support range discussed for the past few weeks, along with common resistance range. Last Friday, markets got rejected at the moving average; caution advised on buying the dip to go long right now.
White House states President Trump is speaking with European allies and countries in the region about opening the Strait of Hormuz. Concern: Iran controls the Strait of Hormuz, and without a settlement with Iran, it's unlikely to open. This echoes last week's statement that the war in Iran was pretty much complete, causing oil prices to drop and equity markets to rise. Two days later, Trump retracted, saying the war could go on for another 3 to 4 weeks.
What's the truth? Trump may be making weekly statements, especially on Mondays, to drive oil prices down (as they make him look bad) and boost equity markets for one or two days before giving it back.
Markets go up when uncertainty gets removed. They go down when uncertainty presents itself.
Base long or short decisions on data, not impulse trades from Trump's tweets that he retracts 24 hours later. Today's price increase driven by comment on reopening the Strait of Hormuz, which would boost equities and drop oil prices if it happens—but this hasn't been the pattern lately. Trump says anything to drive oil down and markets up.
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