Rather than repeat an article from last week, we just want to remind out readers that although we do not giving trading advice, and that we only identify trends that last about 2 or 3 months. We see the current sell-off in the US as a healthy, and deep move lower, that will take weeks to find a bottom. Currently, the S&P 500 and the Dow Jones are price searching with names like Caterpillar having a horrible time, setting the tone for other stocks. Caterpillar dropped more than 7 percent after its results were released. The current round of tariffs will add weight to markets as global trade conditions could falter.
Tech names traded lower today with Netflix, Amazon and Alphabet as well as Twitter searching for equilibrium at lower levels. Banks are trading lower on concerns of loan growth as a direct negative impact on rising mortgage rates. Higher short-term rates may increase competition for bank deposit as well.
Earnings momentum is the key phrase for many investors as many believe that the peak has been reached – from a pure fundamental standpoint, many people will view this as a clear negative factor. Finally, the concerns about Saudi Arabia have increased as the thought of someone being murdered in a consulate is not being well absorbed by the market. This issue will not explode but will have some negative impact on equity for weeks.