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Stocks Down Another 1%-Plus as Q4 Blues Continue

Jim Giaquinto

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We’ve had a bad start to the fourth quarter of 2019 with the major indices plunging more than 1% in each of the first two sessions.

The market remains concerned about yesterday’s manufacturing report. Apparently, its going to take longer than 24 hours to get over a second consecutive month of contraction and the lowest reading in more than a decade.

And it didn’t help that today's ADP employment report was a little light with only 135,000 jobs being added in September, which was also down from the previous month. 

The major indices started the day in the red and kept slipping, though they did close off their lows.

The Dow plunged 1.86% (or about 494 points) to 26,078.62. The S&P was off 1.79% to 2887.61 and the NASDAQ dipped 1.56%, (or about 123 points) to 7785.25.

Such a performance would sting under any circumstance, but it’s all the more painful coming after yesterday’s selloff. For example, the Dow has started the fourth quarter by plunging more than 3% (or approximately 800 points) in the first two days.

That’s a worse start than last year’s fourth quarter… and we all remember how that turned out.

The market is back to worrying about a recession, which makes tomorrow’s services report and Friday’s jobs report crucial for the rest of this week.

Remember, services makes up a much bigger chunk of the economy than manufacturing and was north of 56 in August (anything over 50 shows expansion).  

However, its not how you start a quarter that matters, it’s how you end it. And there’s a number of potential catalysts on deck that could turn things around in short order, especially the trade meetings next week and earnings season.

Today's Portfolio Highlights:

Large-Cap Trader:
Now you see why John loaded up on short positions late last month. While the S&P was down 1.8% today, this portfolio had three of the top five movers among all ZU names. Those strong performances came from Proshares Ultrapro Short Dow30 (SDOW, +5.5%), Proshares Ultrapro Short S&P500 (SPXU, +5.4%) and Proshares Ultrapro Short NASDAQ (SQQQ, +5.2%). 

Surprise Trader: "If yesterday was a butt-kicking for stocks, then today was the extra kick in the ribs. Stocks were smashed, gapping lower and fading the entire morning. The selling did not let up until the final two hours of the session when there was a small bid.

"I had a hunch we’d gap down after breaking the 50-day but that didn’t make it feel any better. An ADP payroll number shy of expectations was today’s bit of bad news that set off an already ornery market.

"If the ADP number today is any indication, the NFP number on Friday could come in a little light. With two days of heavy selling already on the books, this market is looking oversold down here. The “No Man’s Land” between the 200 and 50-day moving average is not where you want to spend too much time. I think tomorrow will prove to be a great buying opportunity for equities."
-- Dave Bartosiak

Until Tomorrow,
Jim Giaquinto

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