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T3’s Take 3: Small Caps Sinking the Ship?

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1) We’re Getting Closer. Right?

It was quiet day ahead of Alphabet (GOOGL) and Amazon (AMZN) earnings.

This morning started with the market opening above yesterday’s close despite weak markets around the World. Maybe it was a solid earnings report from Tesla (TSLA) or the continued strength in the financials.

Even with these, seemingly positive, factors, the S&P 500 was unable to hold on to early gains and closed down, 0.30%. The Nasdaq was equally weak and finished the session down, 0.61% as both AMZN and GOOGL weighed.

Oil rebounded today, with USO closing up, 1.08%. Despite the strength, the SPDR Select Sector Energy ETF (XLE) closed down, 0.34%

It was another tough day for the Gold Miners as GDX lost 1.66%.

2) Small Caps Sinking the Ship?

It was noted yesterday that the Russell 2000 (IWM) broke key support and may be a leading indicator.

Today IWM continued lower, closing down 1.15%. This weighed on the general market as most other sectors closed up on the day.

At this point, the IWM could come all the way down towards the 200ma, which is currently positioned around $114.00. If that were to happen, we would see a correction in the broader market as well.

In the event this turns out to be a false move, it could help add a lot of steam to move higher as short sellers would be forced to cover.

Ultimately, we may not get a “real” move until after the FOMC announcement next week or, maybe more likely, following the Presidential Election.

3) Stocks Shrug Off Oil

This morning, T3 Live’s Jeff Cooper offered the following thoughts on Oil:

Stocks and oil have been following in lockstep for much of the month…until today.

Oil is up nicely and stocks are heavy.

A breakout in yields visa vis TBT is weighing on the markets.

TBT is on a Gap & Go eclipsing its 200 day.

The propensity of selling is underscored by the Gap & Crap in TSLA.

What happens if this is a one/two day rally in oil that is simply backtesting the 20 day line in USO?

Click here to learn more about Jeff Cooper’s Daily Market Report.