Tariffs have thrown the stock market into dizzying moves, moving up and/or down based on whatever news headlines circulate. The broader stock market indexes have all declined, although they are holding on to their 200-day simple moving average (SMA). The Nasdaq Composite ($COMPQ) fell below the average on Tuesday, but recovered on Wednesday and closed above it.

Looking at weekly performance, Real Estate, Health Care, and Consumer Staples are the top three S&P sector performers. These sectors fall under the defensive category, which suggests that investor uncertainty is still in the air. Gold and silver prices are rising, an indication of risk-off sentiment.

The Mag 7 Breakdown

Investors were flocking to the Mag 7 stocks not too long ago, but this is no longer the case. The daily chart of the Roundhill Big Tech ETF (MAGS), a basket of the Mag 7 stocks, illustrates that this group of stocks has technically broken down.

FIGURE 1. DAILY CHART OF ROUNDHILL BIG TECH ETF (MAGS). The ETF which holds all the Mag 7 stocks has broken down. However, it bounced off its 200-day simple moving average, and the relative strength index stayed above the 30 level.Chart source: StockCharts.com. For educational purposes.

Note that despite the downward trend, MAGS managed to bounce off its 200-day SMA. The relative strength index (RSI) didn’t dip below 30. Does this mean the Mag 7 could bounce back? Semiconductor stocks were up two days in a row, which may have helped MAGS stay afloat. But semiconductors are vulnerable to tariffs, so why are these stocks showing green shoots? It’s a very challenging market and I would monitor the MAGS chart daily. You wouldn’t want to miss out on a strong upside move.

Change is in the Air

President Trump’s tariffs have stirred the pot and caused shifts in investor sentiment. International stocks are gaining momentum, something we haven’t seen in a long time. The weekly chart below summarizes the performance of US stocks against the rest of the world.

FIGURE 2. US VS. THE REST OF THE WORLD. The Vanguard Total Stock Market ETF which consists of large growth US stocks is declining in performance against international stocks.Chart source: StockCharts.com. For educational purposes.

It’s also worth noting the performance of the US dollar. The US dollar plunged and is now trading below its 200-day SMA. The Canadian dollar and Mexican peso are showing signs of gaining strength against the US dollar (see chart below).

FIGURE 3. THE WEAKENING US DOLLAR. After tariffs on imports from Canada and Mexico were implemented, the US dollar started to weaken against the Canadian dollar and Mexican peso.Chart source: StockCharts.com. For educational purposes.

The Bottom Line

Now’s a good time to test your patience. It’s not exactly the type of market you want to open long positions. It’s more of a “wait and see” type of market. We’ll get the February jobs report on Friday, but how much it’ll impact the market is unclear. With investors focused on tariffs, the jobs report may be brushed off, unless it comes in vastly different than the forecast. Expect more volatility in the weeks ahead.

Disclaimer: This blog is for educational purposes only and should not be construed as financial advice. The ideas and strategies should never be used without first assessing your own personal and financial situation, or without consulting a financial professional.

With US tariffs on Canada, Mexico, and China having taken effect at midnight on Tuesday, US indexes extended their Monday losses, deepening concerns over the escalating trade war.

It was only a few months ago when analysts held relatively optimistic forecasts of emerging and developed market performance relative to the US. Since Trump’s re-election, Wall Street has grown more cautious due to renewed trade tensions, particularly with China, Canada, and Mexico. Nevertheless, given the sharp decline in US stocks, I thought it might be prudent to examine international markets to see how emerging and developed markets might be responding to the new Trump trade war.

Here’s a MarketCarpets view of the action early Tuesday morning:

FIGURE 1. MARKETCARPETS ONE-DAY VIEW OF INTERNATIONAL MARKETS. It’s a mixed bag with mostly negative responses.Image source: StockCharts.com. For educational purposes.

As expected, iShares MSCI Canada ETF (EWC) and iShares MSCI Mexico Capped ETF (EWW) are down while iShares MSCI China ETF (MCHI) remained resilient in the early part of the trading session.

For a broader yet short-term perspective, the five-day view shows a similar trend, but with deeper losses.

FIGURE 2. FIVE-DAY VIEW OF MARKETCARPETS INTERNATIONAL MARKETS. No clear leadership here with developed and emerging markets largely declining across the board.Image source: StockCharts.com. For educational purposes.

Developed and emerging markets are largely in the red with no clear leadership. What markets are bracing for are the tariff responses, which could significantly complicate and negatively impact global trade dynamics.

Developed vs. Emerging vs. US Markets

For those of you who might not be aware of it, the “developed” category excludes US markets. This may seem as strange as China’s inclusion in the “emerging” category where it is the second largest economy in the world. But there you have it. So, to get a clear picture of relative performance between the US markets, developed markets, and emerging markets, we’ll look at three ETFs representing each category and compare their performance using a one-year view on PerfCharts.

• iShares MSCI EAFE ETF (EFA): developed markets
• iShares MSCI Emerging Markets ETF (EEM): emerging markets
• SPDR S&P 500 ETF (SPY): broader US stock market

FIGURE 3. PERFCHARTS COMPARING RELATIVE PERFORMANCE OF DEVELOPED MARKETS, EMERGING MARKETS, AND THE S&P 500. The S&P and emerging markets are declining, but developed markets are rising and holding steady.Chart source: StockCharts.com. For educational purposes.

To get an even clearer, if not more direct comparison, take a look at a weekly ratio chart comparing EFA with EEM. From here on out, we’ll be focusing solely on international markets (omitting the S&P 500).

FIGURE 4. CHART OF EFA:EEM WITH GUPPY MULTIPLE MOVING AVERAGES. Notice how the short- and longer-term market sentiment is in an uneasy equilibrium.Chart source: StockChartsACP.com. For educational purposes.

What’s valuable about plotting a Guppy Multiple Moving Average (GMMA) is that its two color-coded ribbons are proxies for short and long-term investors. Developed markets have been trending strongly against emerging markets since the summer of 2021. But now, with the two ribbons converging, it’s telling you that short- and long-term sentiment is hovering at an uneasy equilibrium. There’s still plenty of uncertainty, even with developed markets pulling ahead.

Despite the global trade environment, might EFA or EEM present any tradable opportunities from a technical perspective? Let’s shift over to a daily chart of EFA for a closer look.

FIGURE 5. DAILY CHART OF EFA. A wide trading range with a few indications of a potential breakout.Chart source: StockCharts.com. For educational purposes.

EFA is trading near the top of a wide trading range. If you were to look at a naked chart of EFA, the price action would seem a little chaotic. This is why I decided to plot the following indicators to contextualize the price action. As complex as it may look, the indicators make the price action simpler to understand.

Here are a few key points to consider:

• EFA’s wide trading range is defined by the August low and September high.
• The latest surge is accompanied by a rise in the StockCharts Technical Rank (SCTR) score, which has now surpassed 70 (a bullish threshold I use) signaling strong technical momentum across multiple indicators and timeframes.
• The Accumulation/Distribution Line (ADL) is rising steadily and is above the current price, indicating that money flows are steadily pouring into the ETF (and by proxy, stocks included in this particular developed market index).
• I am dividing EFA’s range using Quadrant Lines. Note how the 2nd and 3rd quadrants align with the areas of concentrated trading volume, as shown by the Volume-by-Price indicator. This high-volume range can act as either support or resistance. If EFA were to eventually break out of its current range, a favorable scenario would be to see it trade above the lower limits of the third quadrant; more preferably, bouncing off the second quadrant and eventually breaking above its September high.

If this looks semi-bullish, EEM looks a bit more stuck. Here’s a daily chart.

FIGURE 6. DAILY CHART OF EEM. Support and resistance levels are plotted in an otherwise messy trading range.Chart source: StockCharts.com. For educational purposes.

EEM has sharply declined after falling below the bullish SCTR threshold of 70. After failing to retest its September high, it has retraced back toward the middle of a range that extends as far back as May of last year. The most concentrated portion of that range, as shown by the Volume-by-Price, lies between $41.50 and $43.50. While the ADL signals positive buying pressure relative to the decline in price, it’s also flattening out, indicating that money flows may be steadily declining.

Despite the volatile price action, support and resistance levels remain well-defined (and the  Volume-by-Price indicator helped confirm these levels). EEM is likely to bounce between support ($41 and $42) and resistance ($43.50 and $45.50) unless macroeconomic catalysts trigger a breakout in either direction below or above the current range. For now, patience is key—waiting for EEM to establish a clearer direction, technically or fundamentally.

Action Steps

Here are a few things you can do:

• Add EEM and EFA to your ChartLists.
• Observe how their price response to key levels mentioned above aligns with global trade environment developments.
• Monitor MarketCarpets (International ETFs) regularly to see if any patterns of consistency emerge over time.
• If a market shows consistent bullish or bearish trends, zoom in on the specific countries to determine if they align with their developed or emerging market group or are moving independently.
• Monitor the SCTR scores and analyze those charts further to see if they present investment opportunities.

At the Close

Given the heightened uncertainty surrounding global trade, developed markets have shown relative strength, while emerging markets remain in a fragile position. With tariff responses still unfolding, you should stay alert to price action while monitoring broader market sentiment for signs of directionality. For now, patience and observation remain key in navigating these volatile markets.

Disclaimer: This blog is for educational purposes only and should not be construed as financial advice. The ideas and strategies should never be used without first assessing your own personal and financial situation, or without consulting a financial professional.

In this video, Dave analyzes market conditions, bearish divergences, and leadership rotation in recent weeks. He examines the S&P 500 daily chart, highlighting how this week’s selloff may confirm a bearish rotation and set downside price targets using moving averages and Fibonacci retracements. To validate a potential end to the bearish phase, he shares a key technical analysis chart. What’s your S&P 500 downside objective?

This video originally premiered on March 4, 2025. Watch on StockCharts’ dedicated David Keller page!

Previously recorded videos from Dave are available at this link.