The stock market sold off hard after President said that the US will implement tariff on Steel and aluminum imports next week. This is the second set of tariff with many more to come.
This is very negative for the world economy as a whole. First it was the currency war, now trade war, then world war. The stage is set for an escalation of trade war as other countries would now starts to impose their own tariff as well.
NQ dropped down to its critical 20 and 50 day moving average before bouncing into the close. The Dow and the S&P however both broke below their critical 50-day moving average, setting potential massive algorithm selling as trailing stop-losses get hit.
Whether or not the market will sell-off on Friday it is very difficult to predict because the Fed is certain to intervene aggressively buying the stock to keep it up. In addition, traders may be closing their short ahead of the weekend. In doing so, providing support for the stock market.
Come next week, as long as the Dow and the S&P 500 remains below their 50-DMA, selling could get out of control.
NQ critical support is now 6700 price level
