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Stocks need a boost to remain above key support levels

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Stocks gapped down to start the new week yesterday, and after a morning attempt to rally back, the indices drifted lower for most of the rest of the day, closing with moderate losses, although a late rally took them off the lows of the day. The Dow, down over 200-points at its lows, closed with a loss of 84. The S&P 500 gave up the ghost as it fell below the key 50-day moving average again.

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Trade. Trade. Trade. That's all we're hearing about and the question is how much of a deal had already been priced in, and has this recent decline priced in a no deal already?

The tech stocks are getting hit the hardest by this no deal, with Apple falling out of a bear flag and below its 200-day EMA. As goes Apple....?




The entire semiconductor sector is taking a hit on this also and it too broke down from a bear flag on Friday, and followed through on Monday with another 4% loss, also losing its 200-day EMA.




These are some warning signs, along with some of the technical breakdowns we've been seeing in the index charts, as you'll see below.



The S&P 500 (C-fund) gapped down yesterday, rallied back to fill the morning open gap, then drifted lower for most of the rest of the day. We see some technical issues here with the 50-day EMA failing plus the old rising support line (red), which broke earlier this month, is now acting as resistance. But, the index is only 4% below the recent all-time highs and still up 13% this year, so it's tough to call this too bearish. A break below the 100-day EMA however, may get more folks' attention.




The DWCPF (S-fund) was down sharply and tested the 200-day EMA, which held again. But if it keeps a knock'in someone may let it in, and this is the 5th time it has tested and held. How many more knocks can it sustain? Is this looking like a head and shoulders forming?




The EFA (I-fund) was down on the day but closed just above the 200-day EMA again. It's not the best looking formation with that bear flag developing, but if it can hold above the 200-day EMA then its obviously near the lows of this pullback. But a break below would have it looking over a precipice of little support.




The Emerging markets are struggling. It's not part of our I-fund but an indication of what's going on globally in some of the more growth friendly areas around the world. Look at what has been happening...




The AGG (Bonds / F-fund) was down and broke below the rising resistance line. There's some decent support near 108.65, so I'm not sure I'd expect too much more pullback here.




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

Tom Crowley


Posted daily at www.tsptalk.com/comments.php


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S&P500 (C Fund) (delayed)

(Stockcharts.com Real-time)
DWCPF (S Fund) (delayed)

(Stockcharts.com Real-time)
EFA (I Fund) (delayed)

(Stockcharts.com Real-time)
BND (F Fund) (delayed)

(Stockcharts.com Real-time)

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