Major Earnings for 8-15-19

Before the open: Alibaba (BABA), Briggs & Stratton (BGG), Canadian Solar (CSIQ), Eagle Point Credit (ECC), iHeartMedia (IHRT), JC Penney (JCP), Pointer Telocation (PNTR), Tapestry (TPR), Walmart (WMT)

After the close: Applied Materials (AMAT), Globant (GLOB), Nvidia (NVDA), PagSeguro Digital (PAGS), Sundance Energy Australia (SNDE), Voxeljet (VJET), ZTO Express (ZTO)

Watching the VIX…

The S&P 500 Volatility Index ($VIX) surged to an midday high of 22.71. Prior and upper resistance at 22-22.50 was breached but held. Continued closes above the latter could lead to a retest towards 24.50-25 with the monthly peak at 24.81.

Rising support at 21.50 followed by 20.50-20.


TLT at All-Time High

The iShares 20+ Year Treasury Bond ETF (TLT) resumed its parabolic run after zooming to $145.73 and another fresh all-time high. Blue-sky and lower resistance at $145-$145.50 was cleared and held. Continued closes above the latter could lead to upside potential towards $147-$147.50.

Rising and near-term support is at $145-$144.50. A close below $144 could lead to a quick backtest towards $142.50-$142.


Monthly Lows in Focus on Yield Inversion Risk/ Profit Alert (T)

Monthly Lows in Focus on Yield Inversion Risk/ Profit Alert (T)

8:00am (EST)

The market reversed course on Wednesday after giving back the prior session gains as another sharp drop in yields sent investors back to the sidelines. Specifically, the 2-year and 10-year spread inverted for the first time since 2007 with inversions traditionally seen as indicators of impending recessions.

Although it can be debated if the U.S. is indeed headed for a near-term recession, or not, it is clear fears of a global slowdown are real. The headline news had a negative impact on the major indexes, either way, with prior support levels back in play. It is important to note, the market experienced this scenario a few months ago and bounced back after the 10-year yield fell below the 3-month yield.

The Russell 2000 dropped 2.9% after tapping a late day low of 1,465. Prior and upper support at 1,460-1,450 held with the late May and early June lows at 1,461 and 1,460, respectively.

The Nasdaq plummeted 3% following the midday backtest to 7,762 and close back below the 7,800 level. Current and upper support at 7,750-7,700 held with the monthly low at 7,662.

The S&P 500 sank 2.9% after trading to an intraday low of 2,841. The close below the 2,850 level reopens risk towards upper support at 2,825-2,800 and the 200-day moving average with last week’s low at 2,822.

The Dow stumbled 3.1% following the backtest to 25,521 while closing back below the 26,000 level. Upper support at 25,600-25,400 and the 200-day moving average was breached and failed to hold with the August low at 25,440.

There was no sector strength. Energy led sector laggards after sinking 3.9% while Financials and Communication Services skidded 3.7% and 3.6%, respectively.

Earnings for Tuesday 8-6-19

Before the open: Aircastle (AYR), Black Knight (BKI), Colfax (CFX), Dean Foods (DF), Discovery Communications (DISCA), Duke Energy (DUK), Energizer Holdings (ENR), GreenSky (GSKY), Henry Schein (HSIC), Intrepid Potash (IPI), Kamada (KMDA), LGI Homes (LGIH), Mosaic (MOS), Novanta (NOVT), Pitney Bowes (PBI), Ryman Hospitality Properties (RHP), SeaWorld Entertainment (SEAS), Shutterstock (SSTK), Tenneco (TEN), Unit (UNT), Vonage Holdings (VG), Welbilt (WBT), Zoetis (ZTS)

After the close: ADT (ADT), Beacon Roofing Supply (BECN), Cubic (CUB), Devon Energy (DVN), Extended Stay (STAY), Great Ajax (AJX), HCI Group (HCI), IntriCon (IIN), j2 Global Communications (JCOM), Key Tronic (KTCC), Lending Club (LC), Match Group (MTCH), Noodles & Company (NDLS), Papa John’s (PZZA), Red Rocks Resorts (RRR), Southwest Gas (SWX), Team (TISI), Vivus (VVUS), Weight Watchers International (WW), Zagg (ZAGG)

Sector Update (XLI)

The Industrials Select Sector Spider (XLI) fell for the 4th-straight session despite tapping an intraday low of $73.08. Mid-May and upper support at $73.50-$73 was triggered but held. A close below the latter and the 200-day moving average reopens risk towards $72-$71.50 with the beginning of June low at $71.91.

Lowered resistance is at $74-$74.50. Continued closes above $75 and prior resistance from early June would be a more bullish signal for a rebound towards $75.50-$76.25 and the 50-day moving average that still remains in a slight uptrend.

RSI was able to hold major and late May support at 30. A close below this level would signal additional weakness towards 25-20 with the latter representing the late October and December 2018 low. Resistance is at 35-40.