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Thursday, August 10, 2017

Stocks Lower On North Korea Concerns

Charles Schwab: On the Market
Posted: 8/9/2017 4:15 PM ET

Stocks Lower On North Korea Concerns

Concerns over the North Korea situation and weakness in Walt Disney (DIS) and Priceline (PCLN) after reporting earnings sent stocks lower at the open today. Almost every sector was red but the different indexes managed to battle their way back near the flat line by the close. The exception was the Russell 2000 small cap index which fell below its 100-day moving average sliding -0.94%. Consumer Staples (XLP), Materials (XLB) and Healthcare (XLV) led the reversal while Telecommunications (XTL) and Consumer Discretionary (XLY) underperformed. The DJIA cut its loss in half by the close finishing down 36.64 points (-0.17%) at 22048.70 while the S&P 500 eased 0.90 point (-0.04%) to 2474.02. The NASDAQ dropped 18.13 points (-0.28%) and settled at 6352.33.

The bears were in control with declining issues beating advancing issues 7:3 on the NYSE and 5:2 on the NASDAQ. Volume picked up with declining volume making up 63% of total volume on the NYSE and 60% of the NASDAQ. VIX rose 0.15 point (+1.37%) and closed at 11.11. Crude oil prices rose on a drawdown in inventory adding 0.40 (+0.81%) and the September contract closed at $49.56 a barrel. Gold jumped $19.00 (+1.50%) to $1281.60. Resistance for gold is $1285 and a break above that could point to a move to the $1300-$1310 area.

Even the threat of a nuclear fallout doesn't seem to worry bullish investors as the morning dip was picked up in the afternoon after support levels held. The big three indexes have yet to even test their respective 50-day moving averages but weakness in the DJ Transportation Index and Russell 2000 is being watched by traders. The bulls should feel pretty good after sidestepping any real selling today and could be ready to roll after the first two down days in a row since the first week of July. High-flying semiconductor stock NIVIDIA (NVDA) reports earnings tomorrow and a solid earnings beat could give a lift to the technology stocks. Despite a two-day decline the major averages are still trading mixed for the week.

Earnings to watch for on Thursday include: Brinker Int'l (EAT), Macy's (M) and NVIDIA (NVDA).

David L. Blake, CMT

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