10-07-2018 Trade of the Day

Small-Caps Hold Major Support

U.S. markets opened higher on Friday but were weak for a 2nd-straight session as 10-year Treasury yields moved to their highest level since 2011 to put the brakes on the early gains. A fresh round of tough trade talk from White House economic adviser, Larry Kudlow, also caused some nervousness.

Kudlow mentioned there is maybe a discussion about a Trump, XI, G-20 meeting while saying Chinese so-called friends have done lots of mischief. The downside momentum lasted into the second half of action before a slight rebound into the close with the major indexes extending their losses for the week.

The Nasdaq tumbled 1.2% following the pullback to 7,715. Late July and upper support at 7,700-7,650 held with a close below the latter likely leading to a retest of 7,600.

The Russell 2000 plummeted 0.9% after testing a low of 1,618. May support at 1,620-1,610 and the 200-day moving average held with a close below the latter being a continued bearish signal.

The Nasdaq was off 3.2% for the week while the Russell 2000 declined 4%.

The Dow stumbled 0.7% following the back-test to 26,301. Mid-September support at 26,300-26,250 held with a close below the latter likely leading to further weakness towards 26,000-25,800.

The S&P 500 slumped 0.6% after tapping a session low of 2,869. Early September support at 2,875-2,865 and the 50-day moving average held with a close below 2,850 signaling additional weakness.

For the week, the Dow was down just 11 points while the S&P 500 fell 1%.

Utilities zoomed 1.5% while Real Estate climbed 0.03% and were the only sectors that showed strength.

Technology and Communication Services sank 1.3% and 1% to pace sector laggards.

For the week, Utilities were up 1.8% while Energy advanced 1.6%. Consumer Discretionary was hammered for 3.6% loss and Communication Services fell 1.8%.


Canadian Pacific (CP) upgraded to Buy from Hold at TD Securities
Eli Lilly (LLY) upgraded to Outperform from Market Perform at BMO Capital
Fiesta Restaurant (FRGI) upgraded to Neutral from Underweight at Piper Jaffray
CommScope (COMM) downgraded to Neutral from Buy at Nomura Instinet
Mylan (MYL) downgraded to Neutral from Buy at Mizuho
PepsiCo (PEP) downgraded to Neutral from Outperform at Macquarie


Friday's earnings announcements (EST): 

No major announcements. 3Q earnings season gets underway this week.

TD Ameritrade IMX - 12:30pm


Gold closed at $1,205.60 an ounce, up $4.00

Silver settled at $14.65 an ounce, up $0.06

Copper finished at $2.76 a pound, down $0.02

Crude Oil is at $74.29 a barrel, down $0.28

Bitcoin Investment Trust (GBTC) ended at $7.30 down $0.16

   I hope this helps you prepare for tomorrow. Have a great evening.

   Todd Mitchell


Small-Caps Hold Major Support

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