East to West: Trade wars, nukes and arrivederci

By Colin Twiggs
June 9, 2017 5:00 a.m. EDT (7:00 p.m. AEST)

First, please read the Disclaimer.

Markets are being kept on the hop, with trade tensions between Donald Trump and China, Trump and Canada, Trump and Mexico, and Trump and Europe. On top of that, President Trump has an upcoming summit with North Korea, while enduring a frosty reception from G7 allies after calling for reinstatement of Russia (to form the G8). Europe has its own worries: Brexit, a new populist government in Italy whose long-term agenda may include an arrivederci to the Euro, and several Eastern European leaders having a bro-mance with Putin.

It's impossible to keep up. Discerning the meaning of each tweet or threat and counter-threat, the probability of each outcome and the impact on one's investments. Perhaps we should heed the warning of French philosopher Michel de Montaigne:

My life has been full of terrible misfortunes most of which never happened.

Rather than jump at shadows, it is advisable to simply follow the market. That way you will not be buried under a deluge of conflicting information. You do have to trust that the market will synthesize all available information and arrive at a reasonable conclusion. At times the market will get it wrong but, like a guidance system on a missile, it continually re-calculates until it hits the target. It is difficult, if not impossible, for an individual to do better. Especially in times like this.


China and Korea reflect the uncertainty surrounding current tensions. The Shanghai Composite Index is testing primary support at 3060 while a Trend Index peak below zero warns of strong selling pressure. The market warns that China may not have a strong hand in trade negotiations.

Shanghai Composite Index

South Korea's Seoul Composite Index reflects uncertainty over the outcome of the upcomming summit. War or peace. Looks like a coin-toss at present.

Seoul Composite Index

Japan is more removed from the upheaval and Nikkei 225 respect of its new support level at 22,000 signals an advance to test resistance at the January hiogh of 24,000.

Nikkei 225 Index

India, also on the periphery, is recovering as well. Nifty breakout above 10,800 would signal an advance to test its January high at 11,100.

Nifty Index


Dow Jones Euro Stoxx 600 Index, representing the top 600 stocks across Europe, retreated from resistance at 396 due to worries over Italy. Breach of medium-term support at 380 would be a bearish sign warning of a test of primary support at 365.

DJ Euro Stoxx 600 Index

Footsie retreat from 7800 is a lot milder. Respect of 7600 would suggest another advance. A Trend Index trough above zero, or breakout above 7800, would strengthen the signal.

FTSE 100 Index

North America

The market appears immune to Trump, with the Dow breaking resistance at 25,000 to signal a test of its January high at 26,600.

Dow Jones Industrial Average

Canada's TSX 60 has followed suit. Respect of new support at 940 offers a target of 1000.

TSX 60 Index

No matter how cynical you become, it's never enough to keep up.

~ Lily Tomlin



Colin Twiggs is director of The Patient Investor Pty Ltd, an Authorised Representative (no. 1256439) of MoneySherpa Pty Limited which holds Australian Financial Services Licence No. 451289.

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