Market declines subsided for a short period near the end of last week before news that China is responding to the newly levied tariffs from the US with tariffs of their own. President Trump took to Twitter again on Sunday evening and Monday backing up his plan for playing hard ball with China. The President tweeted that China had backed up from previous agreements in resolving the trade dispute without further tariffs and threatened that their retaliation would be unwise. Markets spent Monday in the red with the S&P 500 closing almost 2.5% negative and the Dow off more than 700 points at the low.
Just like that, the ugly head of market volatility rises up again. Immediately the S&P 500 is heading towards levels of ‘oversold’, as indicated by the Relative Strength Index, not seen since December 13th of last year. Levels of market support are being tested quickly and market volatility may remain elevated until the trade dispute has some positive verbiage on the horizon.