The stalemate of the trade negotiations between Washington and Beijing weighs on the main trend of the US.

There was the increase of 200 billion dollars in US goods on Chinese goods, since last Friday. In fact, before Trump’s words that reversed the direction of the price, the DOW JONES, NASDAQ and SP500 trends were all projected to rise in the short term.

The fundamental scenario

The fundamental scenario that is taking shape on the main global lists, in fact, is not reassuring for investors. They are starting to liquidate “buy” positions on these baskets from their portfolios. The real concern is now not just the green light of Trump of the new duties against Chinese products, but the possibility of an all-out trade war that seems to have become more concrete.

Unlike the past, the real game between Beijing and the US is not just about trade taxes. More than raw materials, cars or computers, it is China’s role in financing the American deficit that has come into play. In the week just ended, in fact, the Treasury account of foreign governments at the Federal Reserve unexpectedly fell by 670 million dollars from 3.06 billion. This causing more than a nervousness to the American leadership. On that account, the lion’s share China is the first creditor of the US and the first financier of Donald Trump’s deficit spending policy.

For the markets (but not only), those balances are no occasional. The more the White House raises the stake in the commercial and currency clash with Beijing, the more the Chinese government removes the money from the counter. Without proclamations, and without anyone noticing. Except the Fed and the Treasury, of course.

Technical scenario

The technical scenario, therefore, is strongly influenced by the macroeconomic one. All the indicators (except for monthly tf) suggest a further drop in the short term.

Operative Ideas

DOW JONES

The stalemate of the trade negotiations made this scenario. The price has broken down the EMA20 ( dynamic support) both in the daily and in the weekly and now aims to break the static support of the 25000 points: it is advisable to have a short entry with the first TP reachable by 25360 today; second TP to 25030; and third TP at 24700 points. The analysis will be invalidated at the upside break of 25800 points.

NASDAQ

A short entry with the first TP at 7335 and second at 7200 points is recommended.

SP500

The first target is on the static support at 2817 points, while the second TP is in area 2770. The third TP is below 2680 points. The analysis is invalidated at the upside break in static resistance in the 2907 points area.