As with micro-trend, first determine if the root cause of the negative macro trend is structural as opposed to transient
When trading on macro trends it is definitely more efficient to utilize industry wide indexes as opposed to individual stocks positions. This is due to the noise within the channel when dealing from micro events.
Next step is to consider the exit strategy for an index position
Shorting outcome for 2019 US/China trade war
Below are a list of transactions on the short side of the market with the attempt to ride this negative macro trend.
Positions were picked based on occurrences of large dip scenarios in the prior few weeks.
This strategy under performed when compared against simply shorting the SnP index during the same period.
The 196 pages of Chinese goods to be taxed by the US governments are spread across 6 categories. Where US manufacturers cannot find alternative sources of supplies, price increase of end product will be expected.
Based on what was observed in December. The ability of the US government to sustain the trade war is predicated upon the Feds keeping interest rate low.
Taxed categories include
The December 2018 US market financial meltdown can be attributed to US government tariffs to reduce demand for foreign material supplies from China coupled with Feds interest rate hike to limit capital needed to boost domestic production.
The trade war seems to serve three purposes:
Drive up demand for domestic supplies
To keep inflation in check the economy grows (traditionally a role played by Fed Interest Rates)