Watch for market signals amid trade war jitters

A MONTH ago, we stood on the brink of a trade war, but in the last few weeks, we have not only tumbled over the brink, but cascaded in a flurry of attacks on friend and foe alike. Canada, Japan and Europe did not expect to be in the US's firing line along with China. This uncontrolled explosion of attacks, and the emerging counter-attacks, have added to uncertainty in US markets. Rather than propelling the market upwards because "trade wars are easy to win", the US market has come to a stuttering pause.

The impact on China has been larger than expected, with the Shanghai Index plunging over the brink that was defined by support near 3,000.

The threat of these trade wars was enough to bring to a crashing end the multi-year uptrend in the Dow in February 2018. The Dow has not fully recovered, although it has not yet started a new downtrend.