Gao Feng, China’s Ministry of Commerce spokesman, said this morning that the Chinese are ready to de-escalate the trade war.
The market surged, investors cheered, and Trump remained silent, so as not to dissolve any of today’s surprise gains.
Even Europe got in on the action, as marked by a significant “spike” in eurozone equities.
Odds are, though, that this temporary goodwill won’t last. After all, investors have already been through this “cycle” several times now.
China says it’s ready to make a deal, only for hostilities to intensify further.
Will this time be different?
It doesn’t look like it.
Gao also said (in not so many words) that China has plenty of “counter measures” available to fight back against the filthy capitalists. They’re just choosing not to retaliate for the sake of protecting the world economy.
Don’t make me laugh.
China’s hurt, and they’re trying to delay until 2020 in hopes of a Trump election loss.
But for the time being, even if they aren’t serious about a long-term trade deal, the market could potentially enjoy a nice rally.
One that might send CSX Corp (NASDAQ: CSX) – our featured stock for today – on a wicked surge to new all-time highs.
In the weekly candlestick chart above, you can see that CSX is in prime position for a big move. A higher low was just set a few weeks ago, and contact with the lower Bollinger Band (BB) was made.
In fact, CSX hit the lower BB back in July and traced it for 5 weeks straight, finally escaping its orbit last week.
Coupled with the extremely low stochastics reading, CSX appears highly oversold.
But now that investors have something to be excited about, an uptrend continuation looks well within reach.
Especially with the current weekly candlestick trading above the candle body highs of the last 3 weeks.
Should CSX keep rising, it might make sense to go long at $67.54, just above the high of the last 4 candlesticks. That’s where the closest level of key resistance currently resides.
If CSX breaks past that price point, the path to $80.00 looks somewhat clear.
But even if CSX doesn’t soar that high, opportunistic traders could still pocket a nice gain. Share prices have plenty of room to run thanks to the early July sell-off that CSX endured.
Now, one thing to keep in mind is that CSX has a dividend payment going out on September 13th. Anyone who held the stock before today (the 29th) will receive that dividend.
Typically, dividend stocks slow down after their “purchase by” date. Today, however, CSX didn’t do that. Instead, it rose (as of midday) by a whopping 2.25%.
To me, that means this dividend stock has legs. More importantly, that the setup above remains perfectly valid despite a dividend disbursement in the coming weeks.
However, that’s not to say that CSX won’t stall slightly after September 13th.
It likely will.
But over the next month or two, regardless of the dividend payment, CSX still appears ready to rise in a major way.
Which is something that should give short-term traders plenty to be happy about in the event of a market recovery.
Should it arrive as scheduled.