A further breakdown in the semiconductor space would be a meaningful warning sign that a trade war with China is coming, according to chart analyst at J.P. Morgan Jason Hunter.

The industry group has been one of the more sensitive groups to U.S.-Chinese trade tensions. Companies like Qualcomm, Broadcomm, and Micron have more than half of their revenue exposure to China.

Hunter, who follows strictly charts to make buying and selling recommendations for clients, said they should watch the 1,430 level on the Philadelphia Semiconductors SOX index in a note Tuesday. If the index falls below that area, it could mean trouble.

"Starting with the Philadelphia Semiconductors Index underperformance through most of 2018 and then strong relative outperformance late in the fourth quarter, even as the broad market came under accelerated bearish pressure, the industry group has been one of the more sensitive groups to US-Chinese trade developments," said Hunter.

Trump tweeted on Sunday threatening to raise tariffs on $200 billion in goods, and possibly add tariffs to another $325 billion in goods, that had not been subject to them previously.

Investors are looking for clarity at this point. The trade talks with China will go forward this week, CNBC reported on Monday. But U.S. Trade Representative Robert Lighthizer also said the new tariffs will go through on Friday.

The ETF (SOXX) tracking the chip index is up more than 30% this year and Hunter said the index continues to bullishly consolidate above the recent breakout for now. The index was down more than 2% on Tuesday. 

Hunter also said the fact that the S&P 500 held near 2,900 on Monday is a good sign for now. It would take a drop through the 2,800 to 2,846 layer to signal the broader 2019 market rally was breaking down. The S&P 500 was down for a second day on Tuesday, off 1.4% around 2,891 in midday trade. 

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