Market Brief – Friday 2/8/19

Stocks started the day lower on news of slower global growth and the lack of any resolution on the trade war, but it hasn’t deterred investors from buying. Treasury yields headed lower and are once again flirting with key technical levels, that if broken to the downside, could spur the largest Treasury short-squeeze in history. Yields lead equities, so expect stock prices to head lower.

Oil and gas producers broke below their support level, which will set up a retest of their December lows. With equities seemingly joined at the hip of oil and gas producers, which are following crude oil, this is another indicator that the broad equity market is headed lower.

All four major stock indices started their day below their respective 100-day moving averages, but only the Russell 2000 was unable to reclaim its 100-DMA. When looking at the 50-week moving average, only the DJIA remains above its, while the S&P 500, Nasdaq-100 and Russell 2000 closed below theirs. When markets are rolling over into a Bear market, the 50-WMA becomes resistance.

Treasury yields closed lower on the day and remain just over a key support level, that if broke, will send Treasury yields and stock prices lower. As I previously mentioned, oil and gas producers closed below their 50-day moving average, which is a Bear signal for the sector and the broad equity market.

Physical gold and the miners continue to look for buyers, but with weak volume, they aren’t finding too many. I still expect a confirmation against one of their major moving averages to confirm the Bull trend.

Agricultural commodities slid back to their six-month low as speculators are hoping to drive prices even lower. The Bulls managed to put a stop on today’s drop at the same price-level that matches the recent bottoms.