Early Market Update

10:54 a.m. ET

The Technology sector is leading the early decline amid what appears to be year-end re-balancing. Due to the Tech sector, NASDAQ 100 -0.9% is the worst performer, SPX -0.6%, Dow -0.7%, Small Caps are now best -0.5%.

The S&P’s phase I trade deal trend is right in the area, which is why I expected local support.

SP-500 (5m)

Small Caps added a second leg lower after relative weakness Friday.

IWM (15m) open at the red arrow

Ten of 11 S&P sectors are red. Technology -0.9%, Semiconductors -1.1% , Industrials -0.6%, Transports -0.65%, Consumer Discretionary -0.7%, Communications -0.85%.

Energy +0.3% is green and Materials is near unchanged.

The Tech sector is this month’s second-best performing sector behind Energy, but it’s this year’s best-performing sector by a wide margin, while Energy is the worst. Some year-end rebalancing appears to be contributing to today’s decline. Other areas like Industrials and Transports are acting more like I’d expect given their trouble clearing above resistance for nearly 2 month.

VIX  is up +11%, VVIX is above 100 (101.60), the safe haven Japanese yen has been bid. Gold and Treasuries were bid on the open off their lows. Overall though, I don’t see panicky trade. If the S&P breaks the trend line above, I expect that would change.

For the moment I expect the averages to hold the areas, maybe bounce a little or consolidate.