The market showed strong momentum on Friday, a rare event for September, to give the bulls some hope heading in the final three trading days for the month. Disappointing news weighed on the open that was followed by choppy action until midday with the exception of Tech and the small-caps.
The strong closes weren’t enough to offset another down week for the major indexes, although the Nasdaq snapped a 3-week losing steak. The Dow and S&P 500 extended their losing streak to 4-straight weeks while the Russell 2000 led overall weakness after leading strength in the prior week.
The Nasdaq tested a late day high of 10,939 before closing at 10,913 (+2.3%). Current and lower resistance at 10,900-11,100 was breached and held. A move above the latter and the 50-day moving average would suggest further strength towards 11,150-11,250.
The S&P 500 settled at 3,298 (+1.6%) with the final hour peak reaching 3,306. Lower resistance at 3,300-3,325 was cleared but held. A close above the latter would indicate further upside towards 3,350-3,375 and the 50-day moving average.
The Russell 2000 made a run to 1,478 while settling at 1,474 (+1.6%). Near-term and lower resistance at 1,475-1,490 was breached but held. A pop above the latter would signal another retest towards 1,500-1,515 and the 50-day moving average.
The Dow touched a high of 27,239 and went out at (+1.3%). Prior and lower resistance at 27,250-27,500 was breached but held. A close above the latter and the 50-day moving average would be a bullish signal for another push towards 27,750-28,000.
Volatility continues to signal a choppy trading range and will likely continue into the first week of October and when the start of the third-quarter earnings season begins. This might change the current nervousness concerning the upcoming Presidential election and the coronavirus woes. However, it could add even more volatility, bullish or bearish, with a major trend developing into yearend.
A closer look at the charts for the major indexes show a 7-session trading range that follows a previous 7-session trading range with lower lows. Given the cycle of events happening throughout October, it will be imperative the bulls avoid lower lows this week. A close above the 50-day moving averages to end the month, along with the VIX taking out the 25 level, would be major victories for the bulls.
Cardinal Health (CAH) upgraded to Buy from Hold at Deutsche Bank
Thor Industries (THO) upgraded to Buy from Neutral at Northcoast
Qualcomm (QCOM) double upgraded to Outperform from Underperform at Exane BNP Paribas
Avangrid (AGR) downgraded to Underperform from Neutral at BofA
Universal Technical (UTI) downgraded to Hold from Buy at Argus
Washington REIT (WRE) downgraded to Equalweight from Overweight at Capital One
MONDAY'S EARNINGS ANNOUNCEMENTS
Before the open: Cal-Maine Foods (CALM), Flux Power Holdings (FLUX), NetSol Technologies (NTWK), Palatin Technologies (PTN), Sina (SINA), Thor Industries (THO), Weibo (WB)
After the close: Park City Group (PCYG), Puyi (PUYI), Radiant Logistics (RLGT), United Natural Foods (UNFI)
MONDAY'S ECONOMIC NEWS
Dallas Fed Manufacturing Business Index - 10:30am
Gold closed at $1,866.30 an ounce,