Q4, 2018: Is That You?

Hello traders everywhere. As I sit here and watch the DOW drop over 500 pts and the NASDAQ drop over 130 pts I can't help but think and feel like I've seen this before. Does this feel familiar to you?

If not it should, especially if you open a 1-year chart and look at Q4 2018. Yup, there it is, a significant drop to start Q4 of 2018 much like we see this week. The question is, will history repeat itself or is it just a short-term bump in the road.

Concerns around the economy were sparked on Tuesday after the Institute for Supply Management (ISM) said U.S. manufacturing activity fell last month to its lowest level in more than 10 years.

The weak data sent the major indexes tumbling on Tuesday, the first day of the fourth quarter. The Dow dropped more than 300 points while the S&P 500 slid 1.2%, their most significant one-day drops since Aug. 23. Those losses were enough to wipe out the Dow and S&P 500's gains for the entire third quarter. Both indexes had gained 1.2% in the previous quarter.

Chinese and U.S. officials are scheduled to meet in Washington next week. Both sides have been in a trade war since last year that has rattled investor sentiment and economic growth expectations.

Wall Street's focus remained on the economic data as private payroll growth slowed down in September, according to a report from ADP and Moody's Analytics. Payrolls increased by 135,000 in September, a drop from 157,000 in August. The gains from August also reflected a downward revision of nearly 40,000 payrolls.

Investors see the data from ADP and Moody's Analytics as a preview to the government's monthly jobs report, which will be released Friday at 8:30 a.m. EDT.

Key Levels To Watch This Week:

• S&P 500 (CME:SP500): 3,020.74
• Dow (INDEX:DJI): 27,306.73
• NASDAQ (NASDAQ:COMP): 8,243.80
• U.S. Dollar (ICE:DX): 97.85
• Gold (NYMEX:GC.Q19): 1,499.00
• Crude Oil (NYMEX:CL.N19): 56.76
• Bitcoin (BITCOIN:BITSTAMPUSD): 7,432.84

Every Success,
Jeremy Lutz
INO.com and MarketClub.com