Last Friday, while discussing the regression channel support in the Dow, I wondered if the support would hold? My answer was “maybe not…”
“But will it last? Maybe not, as the trade wars looks to heat up over the weekend. President Trump tweeted the following Friday: ‘Based on the Tariffs and Trade Barriers long placed on the U.S. and it great companies and workers by the European Union, if these Tariffs and Barriers are not soon broken down and removed, we will be placing a 20% Tariff on all of their cars coming into the U.S. Build them here!’”
The chart above is the Nasdaq, which shows today’s huge sell-off. As of this writing, the low of the NQ had a worse than -200.00 point fall. The market is coming to understand that the trade war issue is not going away any time soon.
The Nasdaq broke the strong upward channel that led to seven new all-time highs with today’s swoon. You can see that it (as of now) stopped on the congestion area high zone of ~ 7000.00. The next support level would be near 6860.00…and then the 200-day moving average, which is a lot lower. This could get ugly.