Good afternoon, everybody. JD here with your Rational Trader market analysis daily.
In today’s video: Trump’s tweets make for treacherous trading.
And no — that’s not an exaggeration. If anything, it might be underselling it.
Let me walk you through what we saw today, and how I traded around the chaos.
From Silence to Mayhem
Trump had been relatively quiet on social media for a week or two. And during that silence, stocks performed pretty well.
But today, he was back. And when Trump starts picking fights — especially on social media — the market tends to respond with uncertainty and volatility.
Case in point: this morning’s action.
The Xi Call and the Market Reaction
News broke early that Trump had held a call with Chinese President Xi. At first, the market celebrated — hopes of diplomacy or progress on trade got people optimistic.
But I noticed something right away: no details. Just “they talked.” That’s not enough to trade on — and definitely not enough to feel confident in.
And if you’ve followed Trump’s past behavior, you know the calm never lasts long. If anything, it’s often the calm before a tweet storm.
How I Traded It
As I talked about yesterday, normally, small caps benefit from lower interest rates. And with the 10-year Treasury yield dropping, there was a clear case for a rally there.
But this wasn’t a normal day.
The Trump–Xi news injected just enough uncertainty that even rational analysis became risky. As I always say: when irrational forces are at play, I adjust.
At the open, IWM initially popped — but then sold off. The market began interpreting the economic data that came out (which wasn’t great) as a net negative, despite the lower yields.
Still, I saw an opening. After some hesitation, I entered an arbitrage-style trade in IWM.
Why? Because I knew Trump needed this call to look like a win. On the home front, he’s promoting his “big beautiful bill,” and politically, he had to at least pretend things with China were moving in a constructive direction.
So I jumped in — and sure enough, IWM took off.
I exited the trade quickly, locking in about 60 basis points. And then I got out.
Because once you’ve banked the gain? You don’t stick around to see what kind of tweetstorm is coming next.
And Then Came Elon
Sure enough, Trump’s activity on Truth Social picked up. First came the China call news. Then he pivoted — straight into a messy public feud with Elon Musk.
More noise. More headlines. More uncertainty.
And in a market like this, that kind of headline whiplash is not what you want to sit around and wait for.
Bottom Line
It was a day that reminded me of one of my core rules: even when you have a solid setup, context matters.
When Twitter (or Truth Social) becomes the most important trading indicator of the day, it’s best to stay nimble.
I took my shot, booked my basis points, and stepped out.
Talk soon,
JD
The Rational Trader
P.S. It looks innocent enough… But when a small green diamond appears on certain stock charts, it could change everything.
