The announcement of more U.S. tariffs on an additional $200 billion worth of Chinese goods yesterday after the close upended a four-day market rally. The news sent the futures down hard overnight, leading to a gap-down open this morning, sending all the major market indexes down on the day.
The NASDAQ Composite Index came within 0.4% of its all-time highs yesterday, but the action was already showing signs of tiring as the index churned and closed below its gap-up opening price. Thus, today’s pullback wasn’t necessarily abnormal within the context of the overall action over the prior four days.
However, whether this is just a pullback or the start of a potentially deeper correction of a double-top type of set-up remains an entirely open question. For now, the critical test will be to see how the index holds the 20-dema on any further pullback from here, or whether it simply holds tight up near the highs.
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