1. Moving the markets

The tariff dispute with China intensified pulling the major indexes off their recent highs, as the tech sector got hammered with the Nasdaq dropping -1.43%, its worst day since late July.

The sudden re-appearance of the US/China trade battles rattled Wall Street, although the unveiling of the $200 billion in tariffs on Chinese products has not been exactly a secret, but with this looming threat not going away, investors decided enough is enough with this uncertainty and south we went.

Adding fuel to the fire was continued doubt as to how the Chinese might retaliate, especially while focusing their views on US corporations doing business in China. But, the fallout spread to the domestic arena as well, with some of the most influential companies, namely Apple and Amazon, getting punished at the tune of -2.7% and -3.2% respectively, which was their biggest loss since April.

This marks the first drop for the S&P 500 in five sessions, but the loss was a modest -0.56%. The FANGs led on the way down and experienced their biggest drop in 2 weeks while, at the same time, closing at a 1-month low.

The US 10-year Treasury yield meandered, crossed the glass ceiling of 3% intra-day but backed off to close below it. As this chart from ZH shows, the 10-year yield has closed higher only once since May 23^rd. I believe that it will break through this resistance level soon which, once it does, may have a much-expected adverse impact on equities.

But, with computer algos overseeing the markets, you can never be sure these days about any potential outcome. Only time will tell…

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1. Moving the markets

The bulls dominated again and pushed the major indexes higher with the S&P 500 scoring its fourth straight win. Yesterday’s laggard turned into today’s leader, as the tech sector picked up steam with the Nasdaq adding +0.75%, after spiking during the last few minutes of the session.

Helping set the bullish tone were reports suggesting that China was more receptive to the latest propositions from the US regarding trade talk issues. Of course, as we’ve seen in the past, these types of headlines tend to come and go and have, so far, not produced any tangible results.

In Europe, the ECB made no change to interest rates and announced that it has no plans to do so till summer 2019. That seemed to sooth markets despite them trimming the GDP forecast for 2018 and next year as well. Market reaction was muted.

Looking at the big picture, we see that US stocks continue to decouple from the rest of the world. That simply means that the US markets are still considered the least dirty shirt in the dirty laundry basket.

Again, as trend followers, we don’t really care about that. We are only concerned with one thing, which is the major direction of the domestic markets, as calculated by our Domestic TTI (section 3), and that remains “up,” so we’ll stay invested until that fact changes.

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1. Moving the markets

After yesterday’s rebound, the major indexes struggled to crawl above their respective unchanged lines after a weak start to the session. The Dow and S&P 500 succeeded, while the Nasdaq lagged and closed slightly in the red due to Apple’s struggles. Overall, it was simply a lackluster day with neither bulls nor bears showing any interest in flexing their muscles.

Apple was the center of attention presenting new products, but the “lack of innovation” sent the shares to a -1.24% loss. Other areas of the tech sector got clobbered too, namely semiconductors (SMH), which used to my favorite holding until we sold it back in February. SMH not only gave back -1.15% but also broke below a 4-month support line, although it managed to close above it.

In the financial arena, Goldman Sachs stood out by recording its 11^th down day in a row, a new record losing streak that helped the GSIBs (Global Systemically Important Banks) to drop -23% from January.

Not to be outdone, the Asia Pacific Stock Index fared only slightly better by having fallen 10 straight days, which equals the longest losing streak in its history. Looks like that record will be beaten…

Treasury yields dropped modestly, while the dollar headed south after a weaker CPI reading and renewed hopes that trade talks will begin again in earnest.

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