Bears Return for Weekly Win

U.S. markets showed strength to start Friday’s action as low level trade talks with China resumed in hopes of setting a bigger stage for negotiations in October. However, comments from President Trump saying he's not looking for a partial deal, he's looking for a complete deal, and that China buying agriculture products would not be enough to get a trade deal done, halted momentum and push towards all-time highs.

To complicate matters, Chinese trade officials returned home earlier than expected while skipping a planned visit to farms in Montana. The uncertainty spoiled the chance for a 4th-straight weekly win for the major indexes with volatility spiking above key resistance and giving a neutral reading heading into next week.

The Nasdaq was lower by 0.8% following the intraday pullback to 8,086. Near-term and upper support at 8,100-8,050 was breached but held with a close below the latter and the 50-day moving average signaling additional weakness towards 8,000-7,950.

The Dow dropped 0.6% after testing a late day low of 26,926. The close below upper support at 27,000-26,800 was the 1st in 8 sessions with a move below the latter getting 26,600 and the 50-day moving average in focus.

The S&P 500 fell 0.5% following the 2nd half fade to 2,984 while closing back below the 3,000 level for the 1st time in 4 sessions. Prior and upper support at 2,975 held with a move below 2,950 and the 50-day moving average signaling a possible near-term top.

The Russell 2000 dipped 0.1% after trading in a 16-point range and stalling at 1,570 midday. Major support at 1,560 was breached for the 3rd-straight session and failed to hold on the backtest to 1,554 with risk towards 1,550-1,540 on continued weakness.

For the week, the Russell 2000 tanked 2% and the Dow was down 1%. The Nasdaq lost 0.7% and S&P 500 declined 0.5%.

Healthcare and Utilities led sector strength with gains 0.6% and 0.4%, respectively. Technology and Consumer Discretionary were the weakest sectors after falling 1.2%.

The best performing sectors for the week were Utilities (1.5%) followed by Real Estate (1.4%) and Healthcare (0.5%). Sector laggards included Consumer Discretionary (-2.5%), Industrials (-1.9%) and Financials/ Materials (-1.4%).

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ANALYST UPGRADES/DOWNGRADES

Etsy (ETSY) upgraded to Outperform from Sector Perform at RBC Capital
Costco (COST) upgraded to Accumulate from Hold at Gordon Haskett
LiveRamp (RAMP) upgraded to Strong Buy from Outperform at First Analysis

Cosan (CZZ) downgraded to Equal Weight from Overweight at Morgan Stanley
Suzano (SUZ) downgraded to Neutral from Buy at Goldman Sachs
Xilinx (XLNX) downgraded to Neutral from Buy at BofA/Merrill

FRIDAY'S EARNINGS ANNOUNCEMENTS  
Before the open: Cantel Medical (CMD), Pintec Technology (PT), Uxin Limited (UXIN)
After the close: Akerna (KERN), Hailiamg Education Group (HLG)

UPCOMING ECONOMIC NEWS
Friday's economic reports (EST): 
Chicago Fed National Activity Index - 8:30am
PMI Composite Flash - 9:45am

METALS / OIL
Gold closed at $1515.10 an ounce, up $8.90
Silver settled at $17.85 an ounce,  down $0.03
Copper finished at $2.61 a pound, unchanged
Crude Oil was at $58.39 a barrel, up $0.02
Bitcoin Investment Trust (GBTC) ended at $12.80, up $0.15


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


   Todd Mitchell


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