Market Alert - The Close

NASDAQ put in a second day of a relief 'bounce' while SP500 and DJ30 struggled on the heels of the 'let's start the trade talks again -- BUT -- also say we are going to ramp tariffs higher' Tuesday session. Some techs bounced but gave up gains even as AAPL's earnings helped assuage some of the other not so great reports from very key stocks -- you know the names, FB, NFLX, AMZN and their various levels of misses.

I call the NASDAQ move a 'bounce' because it was just not that impressive. A gap to a tight doji below the merged 10/20 day EMA on even stronger, above average volume. Sharp declines to the 50 day MA followed by two days of upside that were barely upside. Thus far not a strong return of 'buy while you can now' bids. Still holding the 50 day MA's as in late June, and that buys it time to heal its wounds. Not quite comforting, however, in terms of entering a new series of upside plays on these stocks. We have a play on AMZN, and it moved to the buy point, but we watched volume all session and it was far, far lower than the recent distribution volume. So, we see if this NASDAQ bounce attempt develops a bit more.

SP500, DJ30 gave up the Tuesday gains off a test of near support, but it did not flip the patterns. Volume was lower so it was not a big selloff, but individual stocks that were starting to stretch their legs upside after long dormancy were hit more than we wanted to see. Those trade worries coming back around for the day, and afterhours the White House has formally inquired regarding raising those 10% tariffs to 25%. And the beat goes on.

SP500 -2.93, -0.10%
NASDAQ 35.50, 0.46%
DJ30 -81.37, -0.32%
SP400 -0.31%
RUTX -0.09%
SOX -0.09%

Likely the Wednesday market action was a pause in what is an ongoing rotation from newer growth to 'older' growth in SP500, DJ30. Trade issues tend to play the outsized role as the outside influence, and given the White House pushing its Tuesday statements about increased tariffs, Thursday may see another session of these 'older' economy stocks testing/struggling before they find their feet again. It does not look as if AAPL's return to better earnings (recall, its last couple of reports were not stellar) will offset the out and out misses by NFLX, FB, and AMZN. Thus, after the most recent trade tariff worries die off (and those have had shorter and shorter half lives the past several weeks) it would appear that this rotation trade will resume.


On the session we took some gain ahead of earnings on CRUS, SQ, both modestly lower afterhours. Closed CRM and QRVO, bought some puts on AVGO as it fell from its four session test of its rally to the 20 day EMA from that vicious gap lower mid-July. As for the rest, we see how the less than inspired tech rebound shapes up on day 3, and if the Wednesday turbulence for the NYSE large caps subsides.

Have a great evening!
______________________________________
Jon Johnson, Chief Market Strategist
InvestmentHouse.com

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