Bears Return for Weekly Win

U.S. markets showed strength to start Friday’s action as low level trade talks with China resumed in hopes of setting a bigger stage for negotiations in October. However, comments from President Trump saying he’s not looking for a partial deal, he’s looking for a complete deal, and that China buying agriculture products would not be enough to get a trade deal done, halted momentum and push towards all-time highs.

To complicate matters, Chinese trade officials returned home earlier than expected while skipping a planned visit to farms in Montana. The uncertainty spoiled the chance for a 4th-straight weekly win for the major indexes with volatility spiking above key resistance and giving a neutral reading heading into next week.

The Nasdaq was lower by 0.8% following the intraday pullback to 8,086. Near-term and upper support at 8,100-8,050 was breached but held with a close below the latter and the 50-day moving average signaling additional weakness towards 8,000-7,950.

The Dow dropped 0.6% after testing a late day low of 26,926. The close below upper support at 27,000-26,800 was the 1st in 8 sessions with a move below the latter getting 26,600 and the 50-day moving average in focus.

The S&P 500 fell 0.5% following the 2nd half fade to 2,984 while closing back below the 3,000 level for the 1st time in 4 sessions. Prior and upper support at 2,975 held with a move below 2,950 and the 50-day moving average signaling a possible near-term top.

The Russell 2000 dipped 0.1% after trading in a 16-point range and stalling at 1,570 midday. Major support at 1,560 was breached for the 3rd-straight session and failed to hold on the backtest to 1,554 with risk towards 1,550-1,540 on continued weakness.

For the week, the Russell 2000 tanked 2% and the Dow was down 1%. The Nasdaq lost 0.7% and S&P 500 declined 0.5%.

Healthcare and Utilities led sector strength with gains 0.6% and 0.4%, respectively. Technology and Consumer Discretionary were the weakest sectors after falling 1.2%.

The best performing sectors for the week were Utilities (1.5%) followed by Real Estate (1.4%) and Healthcare (0.5%). Sector laggards included Consumer Discretionary (-2.5%), Industrials (-1.9%) and Financials/ Materials (-1.4%).