Nasdaq 100 Flirts With 'Death Cross' Amid Tariff Threats and Volatility
US technology companies face a challenging environment due to potential tariff hikes on Chinese imports. The Nasdaq composite is on the brink of a 'death cross', indicating a possible longer-term trend reversal. The upcoming earnings season and geopolitical tensions are adding to market volatility.
An increase in tariffs on Chinese imports, threatened by Donald Trump, could further strain the US technology sector and negatively impact inflation prospects. This could influence the monetary policy of the Federal Reserve. The Nasdaq composite is nearing a 'death cross', with the 50-day EMA set to cross below the 200-day EMA, suggesting a potential longer-term trend reversal.
The upcoming earnings season in the US, kicking off on Friday, could shed more light on the economic situation. American banks are expected to provide insights into the US consumer's situation. Recent data on consumer credit showed an unexpected decrease, indicating that consumers may have spent less in recent weeks.
Market volatility has been high, with the VIX index rising to around 32 points due to Trump's tariff announcement. The Nasdaq composite is struggling with resistance at 18,000 points and remains under pressure, currently near the 38.2% Fibonacci retracement level of the 2022 uptrend. It is also around 10% below its 200-day EMA, strengthening the bears' position. Increasing geopolitical tensions between the USA and China are significantly contributing to this pressure.
The Nasdaq composite is volatile due to geopolitical tensions and technical hurdles. Trump's threat to impose 50% tariffs on Chinese imports, unless China withdraws its retaliatory tariffs, could increase the overall tariff burden to 70%. The upcoming earnings season and the potential 'death cross' on the Nasdaq composite could provide further insights into the market's direction.
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