Bears Stay Aggressive as VIX Clears 20 Market Update for 11/12/2018

U.S. markets showed continued weakness on Monday as a rise in the U.S. dollar and lingering worries about global trade weighed on sentiment. Oil price concerns also played a role after Saudi Arabia said it would cut its oil production, while the Organization of the Petroleum Exporting Countries said it is also considering a more sweeping reduction of output.

The major indexes hit their lows late in the day on reports the White House was circulating a draft report on auto tariffs. Volatility spiked nearly 18% while closing back above a key level of resistance.

The Nasdaq plunged 2.8% after trading to an intraday low of 7,193. Fresh and late October support at 7,200-7,150 held with the index giving back its gains for the month.

The S&P 500 sank 2% with the low reaching 2,722 on the close back below the 200-day moving average. Upper support at 2,725-2,700 held by a point with risk to 2,650-2,600 on a close below the latter.

The Dow tanked 2.3% following the pullback to 25,340 while closing back below its 50-day moving average. Fresh and upper support at 25,400-25,200 failed to hold into the close with a move below the latter being a continued bearish signal.

The Russell 2000 fell 2% after tapping a session low of 1,518. Lower support at 1,525-1,520 was breached and keeps further risk towards 1,500-1,490 in play.

Real Estate gained 0.2% and was the only sector that showed strength. 

Technology easily paced sector weakness after plummeting 3.5%. Energy was off 2.2% while Financials, Consumer Discretionary and Industrials were down 2.1%, respectively.


Analyst Upgrades/ Downgrades

Armstrong World (AWI) upgraded to Neutral from Underperform at BofA/Merrill

Crocs (CROX) upgraded to Neutral from Negative at Susquehanna

Starbucks (SBUX) upgraded to Buy from Hold at Argus

AB InBev (BUD) downgraded to Hold from Buy at Argus 

Cheesecake Factory (CAKE) downgraded to Underweight from Equal Weight at Barclays 

Skyworks Solutions (SWKS) downgraded to Neutral from Buy at Citi


Earnings announcements

Tuesday’s earnings announcements:

Before the open: Advance Auto Parts (AAP), Beazer Homes (BZH), Cae (CAE), Eyenovia (EYEN), Home Depot (HD), National Vision Holdings (EYE), Optinose (OPTN), Tyson Foods (TSN)

After the close: Boxlight (BOXL), Cardlytics (CDLX), Five Point Holdings (FPH), iCad (ICAD), PetIQ (PETQ), Resideo Technologies (REZI), Switch (SWCH), Tilray (TLRY), (WIX)


Upcoming Economic News

Tuesday’s economic reports (EST): 

NFIB Small Business Optimism Index – 6:00am

Redbook – 8:55am

Treasury Budget – 2:00pm


Metals/ Oil

Gold closed at $1,203.50 an ounce, down $5.10

Silver settled at $14.01 an ounce, down $0.13

Copper finished at $2.68 a pound, unchanged

Crude Oil was at $58.86 a barrel, down $1.01

Bitcoin Investment Trust (GBTC) ended at $6.91, down $0.15

Health Care Select Sector Spider (XLV) Looking Bullish

The Health Care Select Sector Spider (XLV) pulled back for the first time in 5 sessions after testing a low of $92.50. Fresh support at $92-$91.50 and the 50-day moving average held with a close below $91 signaling additional weakness and a possible short-term top.

Near-term resistance is at $93.50-$94. Continued closes above the latter would be a bullish development for a run towards $96 and fresh all-time highs.

RSI could be rolling over after failing resistance at 60 and early October support. Continued closes back above the latter would be a bullish development. Support is at 55-50 with a move below the latter signaling additional weakness.

QQQ’s Close Below 200-day MA

The PowerShares QQQ (QQQ) was down for a 2nd-straight session after tapping a low of $170.16. Near-term support at $170-$169.50 held with the close back below the 200-day moving average being a slightly bearish signal. A move below $168 will likely signal a near-term top.

Lowered resistance is at $172.75-$173.25 with additional hurdles at $175-$175.50.

RSI is back in an downtrend with support at 45-40. A move below the latter would signal additional weakness with risk to 35-30. Resistance is at 50.