Bears Keep Near-Term Support and August Lows in Play

investors

U.S. markets showed continued weakness on Tuesday after the Trump administration published a new blacklist of Chinese companies, prompting China to hint about possible retaliation. The 28 Chinese companies were cited for their role in Beijing's repression of Muslim minorities in northwest China.

The "Entity List” bars Chinese companies, or other entities, from buying parts and components from U.S. companies without U.S. government approval and comes ahead of trade talks scheduled to start on Thursday. The major indexes held near-term support levels but the rise in volatility continues to be a major concern.

The Russell 2000 stumbled 1.7% after closing on its late day low of 1,472. Current and upper support at 1,480-1,465 was breached and failed to hold with a move below the latter signaling additional weakness towards 1,450 and the late August low.

The S&P 500 sank 1.6% following the pullback to 2,892 into the closing bell. Near-term and upper support from the start of the month at 2,900-2,875 was breached and failed to hold with risk towards 2,850 and the 200-day moving average on a move below the latter.

The Nasdaq was lower by 1.7% after also settling on its session low of 7,823. Upper support at 7,850-7,800 was breached and failed to hold with a close below the latter getting 7,750-7,700 and the 200-day moving average back in focus.

The Dow dropped 1.2% following the afternoon pullback to 26,139. Current and upper support at 26,200-26,000 was challenged and folded with a close below 25,900 and the 200-day moving average being a bearish development for a retest of the August lows to the 25,600-25,400 area.


There was no sector strength for the 2nd-straight session. Financials and Healthcare paced sector laggards after tanking 2% and 1.9%, respectively, while Technology and Materials fell 1.8%.

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ANALYST UPGRADES/DOWNGRADES

Microsoft (MSFT) upgraded to Buy from Hold at Jefferies
Nordic American Tankers (NAT) upgraded to Buy from Neutral at BTIG
ServiceMaster (SERV) upgraded to Outperform from Sector Perform at RBC Capital

Oracle (ORCL) downgraded to Hold from Buy at Jefferies
Puma Biotechnology (PBYI) downgraded to Sell from Neutral at Goldman Sachs
TerraForm Power (TERP) downgraded to Equal Weight from Overweight at Barclays

WEDNESDAY'S EARNINGS ANNOUNCEMENTS  
Before the open: None​​

After the close: Exfo (EXFO), Richardson Electronics (RELL), Saratoga Investment (SAR)

Wednesday's economic reports (EST): 
MBA Mortgage Applications - 7:00am
Jolts - 10:00am
Wholesale Trade - 10:00am
FOMC Minutes - 2:00pm

METALS / OIL
Gold closed at $1503.90 an ounce, down $0.50
Silver settled at $17.50 an ounce,  down $0.04
Copper finished at $2.57 a pound, down $0.01
Crude Oil was at $52.25 a barrel, down $0.65
Bitcoin Investment Trust (GBTC) ended at $9.64 down $0.22


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


   Todd Mitchell


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