Donald Trump’s on-again-off-again trade war with Canada and Mexico has ramped up uncertainty, causing a violent swing to risk-off in financial markets.
Canada is in no mood to back down. Foreign Minister Melanie Joly responded to the latest twist in the tariff saga: “That’s enough! Canadians have had enough. We are a strong country. We will defend our sovereignty. We will defend our jobs. We will defend our borders…”
The S&P 500 retreated below support at 5800, signaling a primary downtrend.
The Nasdaq QQQ ETF reinforced the bear signal, breaking support at 500.
The Dow Jones Industrial Average is the last major index that has not breached its primary support level, at 42K.
Europe & Australia
The response of international markets is mixed, with the Dow Jones Stoxx 600 Euro Index in an uptrend.
However, Australia’s ASX 200 breached primary support at 8050, signaling a bear market.
Conclusion
A Dow Jones Industrial Average breach of support at 42,000 would confirm a bear market in the US.
Colin Twiggs is a former investment banker with almost 40 years of experience in financial markets. He co-founded Incredible Charts and writes the popular Trading Diary and Patient Investor newsletters.
Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.
Focusing on interest rates and financial market liquidity as primary drivers of the economic cycle, he warned of the 2008/2009 and 2020 bear markets well ahead of actual events.
He founded PVT Capital (AFSL No. 546090) in May 2023, which offers investment strategy and advice to wholesale clients.