S&P 500 Volatility Index ($VIX) Settles at Bullish Reading

The S&P 500 Volatility Index ($VIX) fell 11% after sinking to an intraday low of 15.11. Fresh and upper support at 15.50-15 was breached but held on the close back below the 50/200-day moving averages. Continued closes below the 15 level would be an ongoing bullish signal with additional weakness towards the 14-13.50 area and September lows.

Lowered resistance is at 16-16.50 followed by 17.50 and the 50-day moving average. Any move above the aforementioned levels over the near-term would be a cautious signal.

RSI is in a downtrend and is on track to test September support at 40. A move below this level could lead to a retest towards the 35-30 area and the July low sandwiched in between. Resistance is at 50 and prior support from earlier this month.

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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.

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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.