Bears Cap May with Fresh Lows

U.S. markets struggled throughout Friday’s session following fresh rhetoric from President Trump to impose a 5% tariff on all Mexican imports starting June 10th. Additionally, duties of up to 25% could be imposed in the coming months if Mexico doesn’t take action to reduce or eliminate the number of illegal aliens crossing into the country.

The major indexes closed at fresh lows on the last trading day for May with prior support levels from January, February and March now in play. Volatility was once again on the rise but held the psychological 20 level into the closing bell.

The Nasdaq tumbled 1.5% following the late day backtest to 7,448 and close below its 200-day moving average. Prior and upper support at 7,450-7,400 was tripped but held with risk towards 7,350 and the March low of 7,332 on a move below the latter.

The Dow declined 1.4% after testing a low of 24,809 ahead of the closing bell. Prior and lower support from early February at 25,000-24,750 held on the close below the former with risk towards 24,500-24,250 on a move below the latter.

The Russell 2000 also plummeted 1.4% while bottoming at 1,461 and extending its losing streak to 4-straight sessions. Longer-term and upper support from mid-January at 1,465-1,450 was breached but held with a close below the latter getting 1,425-1,410 in play.

The S&P 500 was down for the 3rd time in 4 sessions after sinking 1.3% while tapping a late session low of 2,750 on the close back below the 200-day moving average. Lower support at 2,775-2,750 was kissed but held with further risk towards 2,725-2,700 and early February levels on continued weakness.

The Dow was down for the 6th-straight week after giving back 3% while the S&P 500 gave back 2.6%. The Russell 2000 dropped 3.3% and the Nasdaq was down 2.4%. For the month, the small-caps were hit for 8.1%; Tech tanked 7.9%; the blue-chips plummeted 6.7%; and the S&P sank 6.6%.

Real Estate and Utilities were the only sectors that showed strength after rising 0.8% and 0.5%, respectively. Energy and Technology fell 1.8% and 1.7% to lead sector weakness.

The were no sectors that closed higher for the week. Consumer Staples (-3.3%) and Utilities (-3.2%) were the worst performing sectors. For May, Real Estate (0.4%) was the only sector that showed strength while Energy (-9.5%) led sector laggards followed by Materials and Technology (-7.1%).

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Canada Goose (GOOS) upgraded to Buy from Neutral at Goldman Sachs
Kraft Heinz (KHC) upgraded to Neutral from Underweight at Piper Jaffray
Uber (UBER) upgraded to Overweight from Neutral at Atlantic Equities

J.Jill (JILL) downgraded to Hold from Buy at Deutsche Bank
Mallinckrodt (MNK) downgraded to Neutral from Overweight at Piper Jaffray
Zuora (ZUO) downgraded to Buy from Strong Buy at Needham

Before the open (EST):
​CooTek (CTK), Huami (HMI)

After the close(EST):
Box (BOX), Caleres (CAL), Coupa Software (COUP), Digital Turbine (APPS), Iteris (ITI)

Monday's economic reports (EST): 
Chicago Fed National Activity Index - 8:30am
Dallas Fed Manufacturing Survey - 10:30am

Gold closed at $1,311.10 an ounce, up $18.70
Silver settled at $14.57 an ounce, up $0.08
Copper finished at $2.64 a pound, down $0.01
Crude Oil was at $53.36 a barrel, down $3.23
Bitcoin Investment Trust (GBTC) ended at $11.06 down $0.57

  I hope this helps you prepare for the trading day. Make it a great one!

   Todd Mitchell

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