Bears Crack Near-Term Support Levels

U.S. markets showed continued weakness on Tuesday but failed to rebound while making lower lows than the previous session. Much of worry was over continuing U.S./ China trade tensions after U.S. Trade Representative Robert Lighthizer said the U.S. will increase tariffs on $200 billion in Chinese goods to 25% from 10% on Friday with the paperwork already in progress.

Volatility spiked to its highest levels since the beginning of the year before holding the 20 level.  
Volume was heavy as investors feared continued selling pressure and the possible outcome and near-term ramifications of this week’s trade talks.

The Russell 2000 tumbled 2% despite the opening back-test to 1,571. Upper support at 1,580-1,565 was breached but held with a close below the latter and the 50/200-day moving averages signaling additional weakness.

The Nasdaq also dropped 2% following the intraday pullback to 7,899. Prior and upper support at 7,900-7,850 was breached but held with a close below the latter opening up risk towards 7,825-7,775 and the 50-day moving average.

The Dow plummeted 1.8% after trading to a late day low 25,789 while closing back below its 50-day moving average. Fresh and upper support at 25,800-25,600 held with a close below the latter opening up risk towards 26,400 and the 200-day moving average.

The S&P 500 stumbled 1.7% following the late session back-test to 2,862. Prior support at 2,875-2,850 was breached but with a close below the latter and the 50-day moving average being a continuing bearish signal.

There was no sector strength.

Technology and Industrials showed the most weakness after getting hammered with losses of 2.2% and 2%, respectively. Healthcare was down 1.9% while Materials have back 1.8%.

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Computer Programs (CPSI) upgraded to Outperform from Market Perform at Wells Fargo
GW Pharmaceuticals (GWPH) upgraded to Outperform from Perform at Oppenheimer
Vivint Solar (VSLR) upgraded to Buy from Neutral at Citi with analyst Praful Mehta

Boeing (BA) downgraded to Equal Weight from Overweight at Barclays
Discover (DFS) downgraded to Perform from Outperform at Oppenheimer
Fluor (FLR) downgraded to Neutral from Buy at Goldman Sachs

Before the open (EST):
​Autohome (ATHM), Bunge (BG), Colfax (CFX), Frontdoor (FTDR), Honda Motor (HMC), Madison Square Garden (MSG), McKesson (MCK), New York Times (NYT), Office Depot (ODP), Plug Power (PLUG), Starwood Property Trust (STWD), Thomson Reuters (TRI), Triumph Group (TGI), Verso (VRS), Wendy’s (WEN)

After the close(EST):
​​21st Century Fox (FOXA), Albemarle (ALB), Camping World Holdings (CWH), Darling International (DAR), Etsy (ETSY), Fossil (FOSL), Green Dot (GDOT), Hostess Brands (TWNK), Kronos Worldwide (KRO), Microchip Technology (MCHP), Nuance Communications (NUAN), PetIQ (PETQ), Quidel (QDEL), Roku (ROKU), (STMP), Sunrun (RUN), Turtle Beach (HEAR), Walt Disney (DIS), Xperi (XPER), Zogenix (ZGNX)

Wednesday's economic reports (EST): 
​​MBA Mortgage Applications - 7:00am

Gold closed at $1,285.60 an ounce, up $1.80
Silver settled at $14.93 an ounce, unchanged
Copper finished at $2.78 a pound, down $0.04
Crude Oil was at $61.40 a barrel, down $1.30
Bitcoin Investment Trust (GBTC) ended at $7.81 up $0.29

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

   Todd Mitchell

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