US-China Economic Warfare? Tech and Healthcare Watchlist S&P 500 E-MINI FUTURES (CONTINUOUS: CURRENT CONTRACT IN FRONT) CME_MINI:ES1! TheAlphaTrades Stock Market Analysis for trading a reopening economy. The case for a market bubble Real estate markets are in dire straits Retail traders aren't seeing the forest for the trees US-China trade war intensifies How to trade an early post-COVID market Last week was an eventful one. Markets rallied off positive Moderna ( MRNA ) news of real progress in human vaccine trials. This echoed the market's reaction to Gilead's (GILD) news earlier in the month, proving that any positive news about a Coronavirus vaccine continues to be a strongly positive market catalyst in the short term. But interestingly, when it was reported that Moderna's executives were dumping stock, the resulting sell-off was buffered surprisingly well by the overall market. Throughout the week, most of the stocks on my watchlist remained flat, holding support levels for a cliffhanger, and Tuesday will determine which way the market wants to go, and I'm not making any prediction based on Main Street for which direction equities will go, as the correlation is weak at the moment. I know this is beginning to sound like a broken record, but whether it's unemployment numbers, looming bankruptcies, vaccine trials flopping, or ugly GDP forecasts, nothing has fazed this market. Every dip is followed by another rebound. From April 13 the S&P 500 has tightened into a range with a high near 3027 and a low near 2723. I think the aggressive actions of the Fed to keep markets stable will shore up any pullbacks and increase the chances of breaking the high of that range. Many small mom and pop restaurants, perhaps most of the restaurant industry as a whole, and highly leveraged businesses will not make it out of this storm, but the majority of companies that make up a large portion of the economy will survive. We may see the passing of a capital gains tax holiday. When Trump runs for the elections in November, he'll do everything in his power to keep directing this market back onto the tracks. There's so much optimism at this point. The quarter-over-quarter projections of GDP growth from the CBO may paint a prettier picture than the year-over-year projections. A 37% drop in GDP in Q2 and more than 40 million Americans unemployed, while companies like IBM continue to cut jobs, does not lead one to expect a sharp bounce back. However, the CBO's projections appear to project a strong recovery with real GDP leaping by 21.5% in Q3, all things considered. It should be obvious to anyone looking at the numbers that Q3 will look golden compared to the unprecedented uncertainty of a mid-pandemic Q2. CFOs and CEOs will have to make important decisions for their companies in Q3, they'll ask tough questions like "how do we cut expenses?" and "how will we raise cash or build revenue in a recessive environment?" As these large-scale corporations begin laying off white-collared employees, whose job security in large part supports the bullish case when looking at the performance of the S&P 500 and the market leaders, the impact on corporate America will negatively impact those arguably inflated prices, and public sentiment for the market along with it. The case for a market bubble The software sector paints the most obvious picture for an equity bubble, but on the flip side this sector continues to produce game-changing technology, and companies like Facebook are planning to move 50% of their labor force to remote work. Companies like Slack are producing tech that will be a necessity for almost every major company as the growth of remote jobs continues. It's not like the dot com bubble where these companies weren't promising any earnings for the next five to 10 years. The companies that are charging the tech sector today expect to be profitable within two to three years even in the face of a recession, and the pace of innovation supports that. So while the tech leaders are expensive on a valuation basis, it's tough to discount their impact for the next five to 10 years. I find it hard to think Facebook or Google , which are both severely dependent on ad revenue, will not be severely impacted by the damage of COVID and the ensuing recession. I expected Facebook to begin to lose value as they lost ad revenue, but their recent earnings report doesn't reflect much of a change in ad activity, though the next quarter may tell a different story. Hertz declared bankruptcy this month, but Uber was already cutting into their honey pot and COVID was the nail in the coffin. This recessive environment has cleansed the market of many players that weren't that healthy, to begin with. Additionally, companies like PayPal and Square have stepped up to fill the Main Street void of payment processing while banking institutions dragged their feet. Fed intervention is only buying time for larger companies with poor business practices, and I'm of the opinion that the money isn't going to the right places. The average person is suffering due to economic circumstances, so why aren't small businesses, the people who make up the real economy getting the majority of the stimulus? Jerome Powell has been all over the news on a campaign to increase positivity, promising that the Fed is willing to do whatever it takes to backstop the market. He continues to ask Congress for its approval in producing more stimulus, but there has to be a limit to how much of that stimulus makes its way into zombie corporations rather than the average Joe. Real estate markets are in dire straits Bankruptcies, insolvencies, and delinquencies are piling up in the real estate market. Companies with the cash to do so are buying up distressed real estate, in places such as New York , San Francisco, California, pretty much anywhere. Any positive real estate numbers are skewed because what's really happening is a fire sale for the wealthiest individuals at the expense of distressed real estate owners. Additionally, senior citizens are looking to sell their homes at a time when there aren't many people out there looking to buy until sellers enter panic mode and begin to sell at lower prices. Millennials have been disproportionately hurt due to Coronavirus. While they were looking to buy a home this year, they've not lost their jobs and face an increasingly uncertain future. The supply influx in real estate against demand dropping all while VC companies are buying up entire neighborhoods is a harrowing sign of things to come and the health of the real economy. Apps like Robinhood are making it easy for new traders to risk it all If there's still a bubble anywhere, it's in brand new retail trading. Robin Hood users are piling into long positions, with perhaps the most hilarious yet terrifying charts revealing how Warren Buffett essentially sold his airline holdings to retail investors. Surely nothing can go wrong… People are perhaps trying to learn from the last recession to buy assets while they're reduced in price, but herein lies a misconception of value because retail traders don't understand just how "cheap" these assets can get. Rising tensions between China and the US Trump will likely heat up the US-China trade war to rally his support and shift blame for the pandemic and ensuing economic downturn onto China. The noise will create a lot of buying opportunities for stocks like Alibaba and JD . One Dark Horse scenario is if the US cancels China's debt, and Trump threatened that he may do just that. If that happens, the US opens a Pandora's box of ruining its reputation and credit system. It would be the worst thing that could happen for the United States, worse for the US than China. Trump's economic advisors said it's not on the table, but even the fact that it was mentioned is enough for concern. How to trade the early post-corona market I continue to stick with the healthcare sector, which is innovating at a high pace in terms of not only COVID-19 response but also surgery-related tech and genomics. The healthcare sector is also tied to the technology sector, which has been crushing the market for the past two years. Tech companies continue to develop enterprise-level cloud systems that companies of all sizes benefit from. Stocks to look out for this week: Globus Medical ( GMED ) - A medical instrument supply company that concentrates a great deal of R&D in invasive surgery innovation, in particular spinal surgery. Google (GOOGL) - This one may be a no-brainer and I'm surprised it hasn't made an all-time high, considering Facebook and Amazon did just that, and Microsoft appears ready to do the same. They took a hit from decreased ad revenue, but overall, 2021 should be a record year in terms of earnings for this massive tech company. Applied Materials ( AMAT ) - The semiconductor space looks healthy to me, and I'll look for a good entry in this stock this week. Illumina ( ILMN ) - This company produces testing equipment and has been involved in COVID testing supplies. They're also involved in genomics. Their customers include large companies like CRISPR and 23andMe. One smart way to choose good companies Here's the key. To be a successful technician, look for solid fundamentals. You have to weigh whether the technicals of a company are matched by fundamentals before making a trade or investment. I start off by researching a target sector, then I invest in the sector once I have a solid understanding of it. I consider which sector has the most near-term momentum, then I pick the best ones in that sector in terms of fundamentals and match that to the time frame I plan to trade within. There are so many companies pulling guidance for the rest of 2020 while the overall sentiment is negative, but there are still opportunities to be found if you look deeper into any given sector and company and project its viability more than two years down the line. A final contrarian word The market has so far traded upward on all of the bad news, therefore I think the market will sell off on good news such as a vast overall reopening of the US economy. I'm waiting for good news to come out so I can get out of all my positions. Once people start to jump back into the market and think the Main Street will start to catch up to the stock market, that's when everything will rebalance with the real economy showing signs of improvement and equities pulling back to earth. Disclaimer Information provided by Alpha Trades, LLC is not intended to be utilized in making any financial decisions and is not a solicitation, nor recommendation to buy, hold, and/or sell a particular product, digital asset, or ICO .