US President Donald Trump’s protectionist policies have undoubtedly rattled the stock market. At current levels of 2,581 the benchmark S&P 500 Index is some 10%below its 26 January peak of 2,873.

 Over recent weeks, the market has swung between pessimism of an out-an-out trade war, and the (relative) optimism of an agreement on trade with China. The Index is now below its longer-term support level and is testing its short-term support level. We suggest that a break below the key 2,580 level could trigger a major sell signal. Of course, with the US market having been on a one-way ticket since early 2009, finding a support level if a serious sell-off occurs is problematic. We estimate a level of 2,100 is a potential floor level – implying an additional 20% downside potential.

 Another factor negatively impacting the US market is the sell-off in the Technology Sector. The so-called FAANG group (Facebook, Apple, Amazon, Netflix, Google)have underpinned the increase in the broader market, with these tech giants driving 25-50% of daily returns, and the tech weighting in the S&P 500 Index increasing from 18% to 28% over the past five years.