It has been fascinating to watch market bears repeatedly predict that tariffs and trade wars would be a catalyst for at least a short-term market top. The logic for that prediction is easy to appreciate. The bull market is already at a very late stage and clichés such as "no one wins a trade war" and "tariffs are just taxes" are easy justifications. Throw in some politics and Donald Trump and the bearish argument couldn't be easier.
The problem with obvious arguments in the stock market is that there are often opportunities for strategic traders to do just the opposite. Those that embrace the bearish view of trade wars and tariffs are already in position to profit if they are correct. They aren't waiting for the technical action to turn. They are finding reason to put on the negative tariff trade now and wait for it to work.
This is an ideal setup for a short squeeze. Some of the bears can't take the pain and will cover and the bulls that have been hesitant feel they have no choice but to add some long exposure. Also, the buy-the-dip mentality makes it even more difficult to stay with the bear trade when the downside only lasts a few minutes.
So, what do you do if you believe in the bear argument about trade wars and tariffs? You wait for the price action to shift. Rather than focus on the intellectual appeal of insights into international economics, stay focused on what the market is actually doing. When the market decides that tariffs matter then they will matter and not a second earlier.
Too many market players think that the market has no choice but to eventually bow to their great reasoning ability. It doesn't' work like that. The blithering idiots that make up the herd of charging bulls will crush the intellectual bears that try to fight them. That is why the market is up Tuesday.
On Monday news hit that Coca-Cola (KO) was exploring the possibility of beverages infused with cannabidiol. This is not a completely new concept. A small company called New Age Beverages (NBEV) is expected to announce its CBD beverage line at the North American Convenience Show (NACS) later this week. Interestingly, it is reported the CEO of Tilray (TLRY) is an investor in Marley Brands, which is owned by NBEV.