Mosaic Chart Alerts

Can stocks overcome trade war headwinds?

In this post, I’ll focus on setups that I’m monitoring for both long and short positions. With a chart and short write-up, this is a quick way to scan and plan potential trades.

These ideas are the end result of my process to identify stocks offering the right combination of growth fundamentals along with a proper chart setup.

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Stock Market Update

Investors are on edge following President Trump’s “Liberation Day” speech, and the next stage of a growing trade war with other nations. Regardless of the outcome, there are more signs emerging that uncertainty around tariffs are doing serious damage to the economic outlook. We’ve already seen consumer confidence plunging while the Atlanta Fed’s GDPNow growth estimate drops into negative territory. This week featured the ISM report on manufacturing sector activity, which is constructed so that a reading above 50 points to expanding activity and below 50 indicates contraction. The headline figure dropped to 49, which was slightly below estimates. But the new orders component, which is a leading indicator of economic activity, declined sharply to 45.2 from 48.6 the prior month (chart below).

Chart from The Daily Shot on X

While the pullback in the stock market from the February peak reflects concerns over the growth outlook and inflationary pressures, the conditions still remain in place to see a rally unfold at least over the near-term. Investor sentiment continues running at extreme fear levels across numerous surveys, measures of asset manager positioning shows a sharp reduction in equity exposure, and positive breadth and momentum divergences (that I covered here) are appearing at the same time. Historic seasonal trends are also a tailwind, with April being one of the strongest months of the past 50 years. Over that span, the S&P 500 has a 71% win rate and 1.6% average return. The chart below plots the S&P’s seasonal tendencies for the past 20 years.

One way to use the pullback to your advantage is to search for stocks showing relative strength. Companies with solid growth fundamentals that are among the first to breakout from basing patterns could lead the next uptrend. We’ve been tracking several names on our focus list showing solid price action. Keep reading to see:

• Open ETF positions.

• Open stock positions.

• Chart analysis for new trade ideas.