DOW closed sharply lower by -724.42 pts or -2.93% at 23957.89 overnight as fear of trade war intensified. S&P 500 was down -68.24 pts or -2.52% at 2643.69. NASDAQ also dropped -178.61pts or -2.43% to 7166.68. Selloff continues in Asian session with Nikkei down -3.6% and HK HSI down -2.7% at the time of writing.
Initial reaction to Trump’s announcement on tariffs against Chinese imports was very muted. Trump is targeting to impose tariffs on USD 50b worth of goods from China. That’s a big difference to the rumor of USD 50b in tariffs. Nonetheless, the selloff picked up momentum in the last trading hour, as traders dumped their position ahead of China’s retaliation measures. (China responded in Asian morning and that will be covered in another note). USD/JPY followed by breaking through 105 handle.
It initially looked like DOW could defend support zone between 23.6% retracement of 26616.71 to 23360.29 at 24128.80 and 24217.76. But the late intensified selling powered the index through this zone. Further fall is now expected in near term to 23360.29 support level. 
In the bigger picture, we’re maintaining the view that price action from 26616.71 is a medium term correction pattern that’s correcting, at least, whole up trend from 2016 low at 15450.56. That means, 38.2% retracement of 15450.45 to 26616.71 at 22351.24 is the first target when the correction extends.
