U.S. Stocks Steady Near Midday, But China Tests Its Bear Lows

NEW YORK, NY – MAY 06: A trader works on the floor of the New York Stock Exchange on May 6, 2013 in New York City. Following a week where the Dow Jones industrial average closed at record highs, U.S. stocks were down slightly after the opening bell. (Photo by Spencer Platt/Getty Images)

U.S. stocks and indexes in Europe were mostly positive Monday, but markets in Hong Kong and China were struggling.

The S&P 500 popped 0.3% midday Monday, while the Nasdaq added 0.2%. The Dow Jones industrial average was just below flat. Small caps rose 0.2% on the S&P 600 gauge.

Volume fell on both major exchanges vs. the same time Friday.

U.S. trade disputes with Canada and China remained unresolved, but stock indexes suggested the tariff war is hurting China the most.

China’s Shanghai Composite is about 25% off its high, which is bear market territory, while indexes in the U.S. and Canada are trading 1% to 2% off their highs.

An index that drops 20% or more off its high is confirming a bear market. Hong Kong’s Hang Seng hit the 20% mark Friday and reached the 21% mark Monday.

So, if there’s ever a winner in a trade war, the markets appear to be saying China has more to lose than the U.S.

China-based stocks trading on U.S. exchanges are in a painful state. Baidu (BIDU) is 24% off its high; NetEase (NTES), 49%; Autohome (ATHM), 40%; Weibo (WB), 50%; Baozun (BZUN), 29%; and Momo (MOMO), 19%.

Going into Monday’s session, Momo was the only China-based stock in the IBD 50. The IBD 50 is comprised of the best stocks in fundamentals and technicals.

Connected-Home Stock
Among U.S. stocks, connected home software provider Control4 (CTRL) rose about 3% in heavy volume. Inside CI magazine reported that Control4 improved its music integration with an operating system update.

Last year, Control4’s stock rose 192%. The stock then corrected 43% as it consolidated in the first four months of 2018. Control4 has been rising since early May and broke out Aug. 21. The stock is 6% above its 33.57 buy point.

Security software provider Palo Alto Networks (PANW) advanced 3% in heavy volume. The stock is trading just above the 5% buy zone from a 219.48 buy point.

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