Market Update 10-14-19/ Join Now!

Bulls Snap 3-Week Losing Streak

8:00am (EST)

The market was in rally mode from the start of Friday’s open and maintained momentum throughout the session in hopes of a good outcome in the trade talks between U.S. and Chinese representatives. Tweets from President Trump confirmed that the U.S. had reached what is being called a phase 1 deal with China that will be put into writing and signed.

6 Month – $462

The deal covers intellectual property, financial services and $40-$50 billion in agricultural goods purchase. Additionally, Treasury Steve Mnuchin confirmed that the tariff hike that was threatened for next week will not go forward now that a deal has been reached. The gains help snapped a 3-week losing streak for the overall market with the major indexes now in positive territory for the month, aside from the small-caps.

The Russell 2000 rallied 1.8% following the intraday push to 1,525 and close back above the 1,500 level. Prior and lower resistance at 1,515-1,530 and the 50-day moving average was tripped but held with a close above the latter and the 200-day moving average being an ongoing bullish signal.

The Nasdaq zoomed 1.3% after testing an afternoon high of 8,115 and easily closing back above its 50-day moving average. Prior and lower resistance at 8,100-8,150 was breached but held with a move above the latter getting 8,200-8,250 in play. The September highs tapped 8,243 and 8,237 and were a week apart.

The Dow surged 1.2% after trading to a 2nd half high of 27,013. Current and lower resistance at 26,800-27,000 was cleared and held with a close above the latter signaling additional strength towards 27,250-27,500 and the July all-time peak at 27,398.

The S&P 500 soared 1.1% following the intraday day push to 2,993. Lower resistance from early September at 2,975-3,000 was cleared but held with a close above the latter getting 3,025-3,050 and fresh all-time highs back in focus.

For the week, the S&P 500 and the Nasdaq added 0.9% while the Dow rose 0.6%. The Russell 2000 gained 0.7% and needs to clear 1,523 to turn green for the month.

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)

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.

VIX Closes Above 20

The S&P 500 Volatility Index ($VIX) was up for the 5th time in 6 sessions after popping to an intraday high of 24.81. Early May and lower resistance at 22-22.50 was breached and failed to hold. A close above the 25 level and the would be an ongoing bearish signal with risk towards 26-27.50 and December 2018 resistance.

Rising support at 23.50-23 following the close above the 22.50 level. A recovery of 20-19.50 would signal some relief from the recent selling pressure.

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Russell 3000 Index ($RUA) Update 5/18/19

The Russell 3000 Index ($RUA) had its 3-session winning streak snapped following the pullback to 1,682 into the closing bell. Upper support at 1,680-1,665 held on the close back below the 50-day moving average. A move below the latter opens up risk towards 1,650-1,635 and the 200-day moving average.

Resistance is at 1,690-1,705 with last week’s peak reaching 1,704. Continued closes above the 1,700 level keeps upside potential towards 1,710-1,725 in play.

RSI is in a slight downtrend with support at 45-40. A move below the latter reopens risk towards 35-30 with the latter representing the monthly bottom. Resistance is at 50 with a move back above this level signaling a return of strength and a possible run towards 55-60.

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Financial Select Sector Spiders (XLF) Holding 50-Day MA

The Financial Select Sector Spiders (XLF) are trying to build a base of support above the 50-day moving average with Friday’s low tapping $26.75. A close below this level could lead to another backtest towards $26.50-$26.25 and the 200-day moving average.

Near-term and current resistance is at $27-$27.25. Continued closes above the $27.50 level would be a more bullish signal for a retest towards the $27.75-$28 area.

RSI is in a slight downtrend with support at 45-40 and the latter representing the month low. A move below 40 would be a bearish signal with risk towards 35 and the March low. Resistance is at 50 and prior support from earlier this month. A move above 55 would signal a return of momentum.

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