Will Tariffs Destroy the Market in July? | ShadowTrader Weekend Edition 06.27.25

TL;DR

Market bullish, but tariffs may disrupt in July.

Transcript

good evening i'm Purzek from shadowtrader.net and this of course is the weekend edition good to be back with you as always we got a lot to talk about this week markets kind of on fire a bit here in the late June very very bullish but we're going to talk a little bit in our lead story today about whether or not this might get derailed as we get clos... Read More

Key Insights

• The market is currently experiencing a strong bullish trend, driven by sectors like technology and financials, while energy and healthcare lag behind.
• Upcoming tariffs, particularly on Chinese imports, are a potential disruptor for the market, with a deadline set for July 9th.
• There is a notable divergence between consumer staples and discretionary stocks, indicating a shift in market sentiment towards less fear.
• The bond market is showing slight upward movement, partly due to stable coin legislation, but remains a challenging trade in the bigger picture.
• Gold has had a negative week, but has hit a primary trend line, suggesting a potential end to its recent downdraft.
• Market volatility has decreased significantly, with the VIX dropping into the teens, reflecting the current bullish market sentiment.
• The market profile indicates potential for a reversal, with value areas showing signs of a possible island reversal pattern.
• Coinbase is highlighted as a strong stock, with potential for a pullback buy at the anchored VWAP and 8 EMA confluence around the 330 level.

Questions & Answers

Q: What sectors are currently leading the market rally?

The current market rally is primarily led by the technology and financial sectors. Technology has seen a significant rise, with a 4% increase, while financials have climbed by 3.5%. These sectors are driving the bullish trend, despite underperformance in energy and healthcare stocks.

Q: What impact could the upcoming tariffs have on the market?

The upcoming tariffs, particularly those on Chinese imports, could significantly disrupt the market. With a deadline set for July 9th, these tariffs may lead to increased volatility and two-sided trading as investors react to potential impacts on supply chains and inflation, which could affect the Federal Reserve's interest rate decisions.

Q: How is the bond market reacting to current economic conditions?

The bond market is experiencing slight upward movement, partly due to recent stable coin legislation. However, the trade remains challenging in the larger economic context. Despite increased interest in bonds, the overall outlook suggests a downward trend, as yields have pulled in slightly, aligning with the bond uptick.

Q: What is the current state of gold in the market?

Gold has had a negative week, impacting investors holding GC contracts. However, it has reached a primary trend line, suggesting that the recent downdraft may be over. This trend line support indicates a potential rebound, providing a more positive outlook for gold investors moving forward.

Q: How has market volatility changed recently?

Market volatility has decreased significantly, with the VIX dropping into the teens. This decrease reflects the current bullish sentiment in the market, as investors show less fear and uncertainty. The reduction in volatility aligns with the overall upward trend in major market indices.

Q: What does the market profile indicate about potential reversals?

The market profile suggests a potential reversal, indicated by the possibility of an island reversal pattern in value areas. This pattern occurs when there is a clear separation between value areas, which could signal a change in market direction. Traders should watch for this pattern as a potential reversal signal.

Q: What is the outlook for Coinbase in the current market?

Coinbase is highlighted as a strong stock with a potential pullback buy opportunity. The anchored VWAP and 8 EMA confluence around the 330 level provide a supportive area for a pullback buy. With a strong fundamental backdrop, including its addition to the S&P 500 and stable coin legislation, Coinbase appears poised for further gains.

Q: What should traders watch for in the upcoming shortened trading week?

Traders should be cautious of the tariff deadline on July 9th, which could increase market sensitivity to related news. Additionally, they should monitor for signs of overextension from the 8-period exponential moving averages on the S&P and NASDAQ, as these are areas where markets often experience pullbacks. The shortened trading week, due to the July 4th holiday, may also impact market dynamics.

Summary & Key Takeaways

• The market is in a bullish phase, led by technology and financial sectors, while energy and healthcare stocks underperform. Upcoming tariffs, especially on Chinese imports, pose a potential risk to this trend as the July 9th deadline approaches.

• Despite a bullish market, consumer staples are underperforming, indicating reduced fear among investors. Bonds show slight upward movement due to stable coin legislation, but the trade remains challenging. Gold hits a primary trend line, suggesting a potential rebound.

• Market volatility has decreased, with the VIX in the teens. Market profile suggests a potential reversal with an island reversal pattern in value areas. Coinbase is identified as a strong stock with a pullback buy opportunity at the anchored VWAP and 8 EMA confluence.