NASDAQ Index, SP500, Dow Jones Forecasts – US Indices Plunge After Tariff Announcement

NASDAQ Technical Analysis

The Nasdaq 100 has plunged in early trading, free market trading if you will, after the announcement of a 50 % tariff on the European Union starting June 1st. The market breaking down below the 21,000 level offers a nice opportunity if you are patient enough. Keep in mind that Monday is Memorial Day in the United States, so the index won’t actually be open. But what we’ll probably see is some noise just above the 20,000 level offering support. If we can turn around and recapture the 21,000 level, that would be a very bullish sign indeed. Either way, I’m not looking to short this index.

Dow Jones 30 Technical Analysis

The Dow Jones has of course followed the same trajectory to the downside, breaking down below the 200 day EMA and then the 50 day EMA. The 41,000 level looks like it’s going to be pretty significant support, and the science of candlesticks does suggest that we could have further downward momentum. That being said, I’m not looking to short this market. What I’m waiting to see is if we stabilize and bounce. Again, keep in mind that Monday is Memorial Day and of course, the Dow Jones Industrial Average will be closed.

S&P 500 Technical Analysis

The S&P 500 has broken pretty significantly to the downside as well, breaking through the 5800 level. There is a gap underneath current trading near the 5700 level where the 50-day EMA and the 200-day EMA both reside. We just had the golden cross, and as you can see, it just lines up quite nicely. So, I’ll be watching this closely. This will give the Europeans three days roughly before the US markets open to perhaps make a statement.

If it looks like something can be worked out or this kicks the Europeans in gear to sign a deal, or to perhaps move closer to what the Americans want, then you’ll probably see this market turn right back around. So, I wouldn’t overreact to this. It’s not necessarily the end of the world, quite frankly. Most of the big European imports are actually made in the United States at this point. We’re speaking specifically of automobiles, for example, Volkswagen in Chattanooga, BMWs in Alabama, etc. So, we’ll have to wait and see if there is any follow through.

For a look at all of today’s economic events, check out our economic calendar.