Trump tariffs and chart patterns


Trump tariffs are back in the news today as the White House threatens duties on European cars. It’s a good time to review the theme because at least two companies impacted by the President’s trade posturing have some interesting chart patterns.

First, General Motors (GM) itself. News of an investment by Japan’s Softbank sent the automaker ripping 13 percent on higher on May 31. That was its biggest rally since the company emerged from bankruptcy in 2010.

GM peaked near $45 early last week and has now edged down to test that recent bullish gap. The stock’s also holding a potential support zone around $41 and its 200-day moving average. Some chart watchers may view that kind of pullback as a potential entry — especially with consumer-discretionary stocks outperforming the S&P 500 by a huge margin in the last month. (GM is a member of that sector.)

General Motors (GM) chart showing bullish gap and 200-day moving average (green).

Next, Cleveland Cliffs (CLF): The iron-ore producer has strong ties to the domestic steel industry, another beneficiary of Trump’s trade measures. It’s had strong earnings, bullish options activity and is considered a turnaround story by analysts.

CLF has made higher lows since late May while pushing resistance around $9, a potential bullish triangle. It’s also on pace for its richest close in over a year.

Cleveland Cliffs (CLF) chart, showing potential bullish triangle.

In conclusion, this isn’t a trade recommendation and everyone needs to do their own homework. But there are some potentially interesting chart patterns popping up.

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David Russell is Global Head of Market Strategy at TradeStation. Drawing on nearly two decades of experience as a financial journalist and analyst, his background includes equities, emerging markets, fixed-income and derivatives. He previously worked at Bloomberg News, CNBC and E*TRADE Financial. Russell systematically reviews countless global financial headlines and indicators in search of broad tradable trends that present opportunities repeatedly over time. Customers can expect him to keep them appraised of sector leadership, relative strength and the big stories – especially those overlooked by other commentators. He’s also a big fan of generating leverage with options to limit capital at risk.