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Headlines are pushing this quiet market around

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It was a choppy day on Wall Street yesterday although the indices didn't trade in too wide of a range. The Dow opened lower but ended the day with a gain of 28-points. It failed to close anywhere near the highs but that was caused by some headline driven movements and it ended the day inline with most of the other indices... flattish.

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Some positive China trade talk news spiked the Dow up 160-points very quickly at about 11 AM ET as trade is still the number one concern for investors at the moment. Then a negative headline from Dow Component 3M sent the Dow lower after 1 PM. The Fed Beige Book came out and was somewhat underwhelming, but stocks stabilized from there into the close.

After rallying nicely on Tuesday, Apple had its typical sell the news reaction to their new products release yesterday, and that gave the Nasdaq some trouble.

Goldman Sachs downgraded Micron's stocks, one of the leaders in the Semiconductor Sector. It sent the SOX Index down sharply, but it rebounded once again at the 200-day EMA, which has been a rock this year. So is that another temporary low for the Semis? The Nasdaq and small caps might hope so.

The S&P 500 / C-fund was flat but it did make a higher high and a higher low. That could be a bear flag forming, or another "V" type low. We've seen more of these turn out to be lows but if it is a bear flag and it breaks down then the trading channel would like break and everything would change. So for now, the bulls remain in charge until the technical picture deteriorates.

The small caps (S-fund) were basically flat and lagged a bit but they produced a good looking positive reversal day. Closing above the Tuesday high would have been better since it is actually still in a minor downtrend having made a lower low and a lower high yesterday. But it did close above the 20-day EMA again so you have to give the nod to the bulls here too.

The Nasdaq had a positive reversal day after recovering from some sharp early losses, and the rising support line continues to hold, and what looks like a possible bear flag may just be something similar to what we saw in late June. Like the S&P, as long as it remains above support, the bulls have the advantage.

The EAFE (I-fund) had a big day despite some Asian markets that are getting clobbered. The dollar was down and that gave most of those overseas indices a boost. The lower support line is holding but it is descending.

The Volatility Index posted a negative reversal day after testing and holding at the 200-day EMA. It seems like it wants to come lower, but the market doesn't feel like it wants to be all that quiet.

The AGG (bonds) was up on lower yields, and the chart is holding at a key level. Bonds do not look good in my opinion, but may be due for some relief in the short-term.

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Thanks for reading. We'll see you back here tomorrow.

Tom Crowley

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