Selling begets selling, and the lower major indices go, the more vulnerable they become.   The session began with an Apple supplier warning, which sent all the names in the Apple (AAPL) supply chain lower. 

I have lost count at how many times we’ve heard stories of slowing demand for Apple iPhones over the years, but the stock still reacts negatively when the news hits.  Technology in general is getting hammered beyond Apple, as Advanced Micro (AMD) is the worst performer in the S&P Technology sector and NVIDIA (NVDA) is down more than 7.0%. 

I’m more concerned with the action in financials, which are being led lower by Goldman Sachs (GS).  I don’t know the whole story but believe there is a link to the latest EU ultimatum to Italy, which will re-submit its budget tomorrow.  Italy has already told the globalist at the EU to pound sand, even calling its leaders “enemies of Europe.”  There are rumors coming out of Europe that Italy will lower its growth forecast for 2019. 

Energy names are lower, even as crude oil tries to put in a bottom on speculation Saudi Arabia is ready to cut production.

Technical Test

If technicians are right, and there must be re-test of recent low points, it means the Dow would at the very least have to test and hold 25,270, below there it is vulnerable to 24,492.

The current weakness and vulnerability of the market isn’t about valuations but surrounding too many questions.

• Global economy
• Strong dollar
• Federal Reserve
• Trade dispute
• Outcome of U.S. Midterms (who would have thought)

Stocks are cheap but can get cheaper near term.  On that note, we want to make sure we don’t take losses on stocks of great companies that will bounce back fast once the dust is clear, and at some point, we want to buy the dip. However, I’m not sure where that is just yet.