U.S. markets skidded for a 2nd-straight session with the Dow and S&P 500 giving back their gains for 2018.

The Nasdaq is still marginally higher for the year but is testing multi-month lows.

The small-caps went into negative territory, for the year, 7 sessions ago.

Although there are signs of a possible bottoming process, volatility remains elevated after closing above key resistance levels. Volume was also light and was a contributing factor as traders prepare for a shortened rest of the week.

The Dow stumbled 2.2% after testing a session low of 24,368.

Shaky support at 24,350-24,200 held with risk to 24,100-24,000 and last month’s bottom on a move below the latter.

The S&P 500 declined 1.8% following the pullback to 2,631.

Major support at 2,650 was breached and failed to hold with risk to 2,600-2,575 and fresh October lows on continued selling pressure.

The Russell 2000 also tumbled 1.8% after trading to an intraday low of 1,465.

Support at 1,480-1,460 was split with a close below the October low of 1,459 signaling additional weakness.

The Nasdaq plummeted 1.7% following the backtest to 6,830.

Upper April support at 6,850-6,800 was breached but held with a move below the latter likely getting the February low at 6,630 in play. The Nasdaq came in 2018 at 6,903 and closed at 6,908.

There were no sectors that showed strength on Tuesday.

Energy was the hardest hit sector after sinking 3.3%.

Consumer Discretionary gave back 2.3% while Financials and Technology and were lower by 2.2%.

Global Economy – European markets settle sharply lower ahead of a proposed summit to discuss ongoing Brexit negotiations.

The Belgium20 was hit with a 2.1% loss while Germany’s DAX 30 gave back 1.6%. France’s CAC 40 was lower by 1.2% and the Stoxx 600 Europe declined 1.1%. UK’s FTSE 100 fell 0.8%.

UK November CBI trends total orders rose 16 to a 4-month high of 10, stronger than expectations for a rise of 1 to -5.

German October PPI rose 0.3% month-over-month and 3.3% year-over-year, matching estimates.

Asian markets settled lower after Chinese regulators claimed to have found massive evidence of anticompetitive behavior, fueling the U.S./China trade spat.

China’s Shanghai was down 2.1% and Hong Kong’s Hang Seng sank 2%. Japan’s Nikkei fell 1.1% and South Korea’s Kospi was off 1%. Australia’s S&P/ASX 200 declined 0.4%.

Housing Starts improved 1.5% to 1,228,000 in October, matching forecasts, while October building permits dipped 0.6% to 1,263,000 after expanding 1.7% to 1,270,000 in September.

Redbook Store Sales up 6.2% for the year in the week ending November 17th.

Atlanta Fed’s Q4 GDPNow estimate was cut to 2.5% from 2.8% previously, below the 2.7% Blue Chip consensus.

Market Sentiment – The iShares 20+ Year Treasury Bond ETF (TLT) extended its winning streak to 3-straight session after testing an intraday peak of $115.46.

Fresh and lower resistance at $115.50-$116 held with a close above the latter being a continuing bullish development. Rising support is at $114.75-$114.25 and the 50-day moving average.

Market Analysis – The Russell 2000 ETF (IWM) fell for the 2nd-straight session after tapping a low of $145.59. Prior support at $145.50-$145 held with a move below the latter and the October low of $144.70 being a very bearish development.

A death cross has officially formed with the 50-day moving average falling below the 200-day moving average.

This technical pattern typically leads to lower lows in the coming weeks and months.

Lowered resistance at $147.50-$148.

RSI is in a downtrend with support at 30.

A move below this level would signal additional weakness towards 25-20 and October lows. Resistance is at 35-40.

The Technology Select Sector Spiders (XLK) fell for a 3rd-straight session after gapping down and testing a low $63.38. April support at $63.50-$63 was revisited but levels that held into the closing bell.

A move below the latter would be a bearish signal for a continued backtest towards $62-$60 and February lows.

New resistance is at $65-$65.50.

Continued closes back above $66 would possibly signal a short-term bottom.

RSI is in a downtrend with support at 30.

A move below this level gets 25-20 and oversold October lows back in play. Resistance is at 35-40 with a move above the latter and the monthly high signaling additional strength.

Existing Position Update

Took profit on STX.

Took off MSFT.

Rolled ROKY.

I’m expecting congestion and stability near current price level. We may see more volatility and possibly a few more shakeouts but in my opinion the worst is behind us.

Remember, markets are always discounting everything that’s known and there’s not much about China or interest rates that’s not on the table.

All the best,
Roger Scott.