Stocks fell last week as investors digested a flurry of market, economic, and earnings data. The big macro fear that continues to weigh on markets is a slowing global economy. We have already seen economic data soften across the globe and several big countries recently reported lousy GDP numbers. Even the US is beginning to show signs of slowing down after two strong years. The recent economic weakness has hurt stocks and has played a big role in sending energy prices into a bear market.

Crude oil plunged into bear market territory and that typically does not happen in a strong economy. Another big concern for investors occurred when shares of Apple sliced below its longer term 200 DMA line. Apple has been under pressure in recent weeks as investors are now concerned that sales of iPhones have peaked. Finally, several big retailers reported earnings last week and most retail stocks fell. If the economy is slowing down, there is a big chance earnings will follow. If that happens, that will bode poorly for stocks. On a bullish note, Thursday appears to be a near-term low and the market is forming a bullish head and shoulders continuation pattern.

MONDAY-WEDNESDAY ACTION:

On Monday, stocks tanked over 600 points as sellers showed up from a two-week hiatus. Apple’s stock was hit hard, falling all the way to the 200 DMA line after a key supplier cut guidance. Apple’s stock has been under heavy selling pressure after its latest earnings report. The company told the Street that it would stop publishing the number of iPhone units and that spooked many people. Since then, a slew of companies have slashed their outlook for the stock. On Tuesday, the market vacillated between positive and negative territory as the market struggled for direction. Crude oil, which is currently in a bear market, plunged over 7% on Tuesday as the selling intensified. Stocks fell on Wednesday dragged lower by tech stocks and financials. Shares of Apple fell again, breaking below the longer-term 200 DMA line, for the first time since April 2018. 

THURSDAY & FRIDAY ACTION:

Stocks opened lower but closed higher on Thursday which could become a near-term low for the market. On Thursday, billionaire investor Ray Dalio said the world is long stocks and that will mean trouble in the next bear market. A few hours later, billionaire investor Paul Tudor Jones said we are in a global debt bubble and that we are headed for some ‘scary moments.’ Stocks ended mixed on Friday as tech shares continued to under-perform.

MARKET OUTLOOK: STOCKS UNDER PRESSURE

The market is weak as the major indices struggle for direction. Stepping back, volatility has picked up and that normally is not a good sign - especially after a 10 year bull market. At the end of September, I noted that the Russell 2000 broke below important support and said it should be watched closely. One week later, we saw a big sell-off on Wall Street as rates spiked. Right now, the next big levels of support to watch are October’s low and then February’s low. Meanwhile resistance is the 50 and 200 DMA lines, then 2018’s high.  As always, keep your losses small and never argue with the tape.