U.S. markets recovered from steep opening losses on continued tariff talk to finish mixed for a 2nd-straight session.

Renewed trade war fears were heightened after the White House confirmed it was prepared to place 25% tariffs, up from 10%, on an additional $200 billion in Chinese imports.

The opening lows nearly triggered panic selling pressure before the major indexes eventually turned mixed within the first 45 minutes, led by Tech and the small-caps.

Volatility also held key levels of resistance before settling just above/ below near-term support.

The Nasdaq surged 1.2% despite opening at its session low of 7,659.

The 50-day moving average was in play for a 4th-straight session before the rebound to 7,808 and close just above the 7,800 level.

The Russell 2000 rallied 0.8% after closing at its session high of 1,682.

Upper support at 1,660-1,650 held on the opening panic to 1,662 with the close above 1,680 being a slightly bullish signal.

The S&P 500 gained 0.5% despite the backtest to 2,796 while closing at 2,827 and splitting resistance at 2,825-2,830.

The index opened right on rock solid support at 2,800 while holding this level for the 13th-straight session and 14 of the past 15.

The Dow dropped for the 3rd time in 4 sessions after sliding 7 points, or 0.03% and trading to an opening low of 25,120.

Near-term support at 25,200-25,000 was split before a 240-point turnaround to 25,360.

Technology Consumer Staples soared 1.3% and 1.1%, respectively, to lead sector strength.

Consumer Discretionary and Communications Services were higher by 0.7%.

Materials and Energy sank 0.6% to lead sector laggards while Real Estate fell 0.5%.

Global Economy – European markets were weak for a 2nd-straight session following action from the the Bank of England.

Germany’s DAX 30 tanked 1.5% and UK’s FTSE 100 fell 1%.

The Belgium20 and the Stoxx 600 Europe were down 0.8% while France’s CAC 40 dropped 0.7% and

The Bank of England voted by 9-0 to increase its Bank Rate by 0.25 percentage points, to 0.75%.

The bank’s committee also voted unanimously to maintain the levels of its non-financial investment-grade corporate bond purchase and government bond purchase programs.

Eurozone PPI for June rose 0.4% month-over-month and 3.6% year-over-year, stronger than expectations of 0.3% and +3.5%, respectively.

UK July Markit/CIPS construction PMI unexpectedly was up 2.7 to 55.8, topping forecasts for a dip of 0.3 to 52.8.

Asian markets were walloped after China’s Ministry of Commerce said it has made full preparation for the U.S. threats to escalate the trade war and would have to retaliate to defend the country’s pride and the people’s interests.

China’s Shanghai sank 2% and Hong Kong’s Hang Seng tanked 2.2%.

South Korea’s Kospi tumbled 1.6% and Japan’s Nikkei stumbled 1%. Australia’s S&P/ASX 200 declined 0.6%.

Challenger Job-Cut Report announced layoffs came in at 27,100 in July, which was down 4.2% compared to the same month of last year.

Initial jobless claims rose 1,000 to 218,000 in the week ending July 28th, matching expectations. The 4-week moving average was down to 214,500 from 218,000.

Continuing claims fell 23,000 to 1,724,000 in the July 21st week after sliding 6,000 to 1,747,000.

Factory Orders rose 0.7% in June, just below forecasts for a rise of 0.9%. The 1% rise from the advance durable goods release was revised down to 0.8%.

Market Sentiment – The iShares 20+ Year Treasury Bond ETF (TLT) tested a morning low of $118.07 with fresh support at $118-$117.75 held holding.

The bounce to $118.74 failed lower resistance at $118.75-$119.

A close above $119.25-$119.50 would be a slightly bullish signal that the selling pressure since mid-July has subsided.

Market Analysis – The Russell 3000 Index ($RUA) has been in a rather tight trading range between 1,660-1,680 since mid-July.

The 1,660 level has been serving as a major floor of support that has held for 16-straight sessions and represented Thursday’s low.

A move or close below 1,660-1,655 would be a bearish signal.

To no surprise, the turnaround and session high reached 1,680 with the close just south of this level. January resistance at 1,680-1,685 is back in play with a move above 1,690 getting 1,695-1,700 and fresh all-time highs in play.

Rising support is at 1,680-1,675. A move below 1,670 would be a slightly bearish development and signal a possible near-term top.

RSI is back in an uptrend with June resistance near the 70 area. A move above this level would signal continued strength and possible breakout territory.

Support is at 65-60 with a move below the latter being a warning signal for additional weakness.

The Dow Jones Transportation Average ($TRAN) tested a low of 10,925 with late July support at 10,900-10,850 holding.

There is risk to 10,800-10,750 and the 50-day moving average on a move below the latter.

Near-term resistance is at 11,100 with continues closes above this signal fresh all-time highs and a possible run towards 11,200-11,250.

RSI is trying to hold support at 60 with a move below this level suggesting additional weakness.

Near-term resistance is at 65 with continued closes above this level being a bullish signal for higher highs.

Existing Position Update

AMZN was liquidated.

Holding on to EBAY.

Expect more upside from stocks in coming days.

Will update you tomorrow.

Roger Scott