U.S. markets closed higher on a Monday for the first time in a month on hopes that the Fed’s Jackson Hole Symposium will see central bankers outline further steps that can be possibly taken to support economic growth, if needed.

The upcoming U.S./ China trade talks were also a source of optimism after Commerce Secretary Wilbur Ross said the U.S. will extend a major Chinese Tech company’s license to buy U.S. goods, by another 90 days.

The Nasdaq rallied 1.4% after testing an intraday high of 8,026 while closing back above the 8,000 level.

Prior and lower resistance at 8,050-8,100 and the 50-day moving average was challenged but held with continued closes above these levels signaling additional strength.

The S&P 500 was up for the 3rd-straight session after advancing 1.2% while tapping a second half peak of 2,931.

Current and lower resistance at 2,925-2,950 was tripped but held with a move above the latter and the 50-day moving average signaling a possible near-term bottom.

The Russell 2000 was higher by 1% following the midday push to 1,515 and close back above the 1,500 level.

Near-term and lower resistance at 1,510-1,525 was cleared and held with a close above the latter and the 200-day moving average being a more bullish development.

The Dow also rose 1% to extend its winning streak to 3-straight sessions following the late day run to 26,222.

Lower resistance at 26,200-26,400 was breached but held with more important hurdles 26,600 and the 50-day moving average.

Energy showed the most sector strength after surging 2.2% while Communication Services and Technology advanced 1.6% and 1.5%. There was no sector weakness for the 2nd-straight session.

Global Economy – European markets posted solid gains on fresh stimulus talk out of Germany.

France’s CAC 40 and Germany’s DAX 30 gained 1.3% while the Stoxx 600 added 1.1%. UK’s FTSE 100 advanced 1% and the Belgium20 was up 0.7%.

German Finance Minister Olaf Scholz said the country has the fiscal strength to mitigate any future economic crisis with full force and suggested that Berlin could free up around 50 billion euros, or $55 billion, of extra spending.

Asian markets closed higher after the People’s Bank of China announced a reform to its key rates that will make for more stimulative policy and help lower real lending rates.

Hong Kong’s Hang Seng zoomed 2.2% and China’s Shanghai soared 2.1%.

Australia’s S&P/ASX 200 jumped 1% and Japan’s Nikkei was higher by 0.7%. South Korea’s Kospi rose 0.6%.

The second quarter 2019 E-Commerce Retail Sales increased 4.2% from the same period last year.

Market Sentiment – Boston Fed Eric Rosengren said he believes monetary and fiscal policy are already accommodative while noting wages are trending up. He said just because other countries are weak, doesn’t mean the U.S. should be easing as well.

Rosengren went on to say he is very concerned about financial stability and what lower yields entail in terms of distorting behavior, such as excessive risk taking.

He wants to see evidence that the U.S. is going into a slowdown, but he doesn’t think the 2% pace is a sufficient slowing.

He added he also needs to see the unemployment rate rising and thinks the Fed has to be data dependent, not give a lot of forward guidance but be very clear what would move rates.

The iShares 20+ Year Treasury Bond ETF (TLT) fell for the 2nd-straight session after tumbling to an intraday low of $143.51. Near-term and upper support at $144-$143.50 was breached but held.

A close below the latter would be an ongoing bearish signal with risk towards $142.50-$142.

Lowered resistance is at $144.50-$145.

Market Analysis – The Russell 3000 Index ($RUA) was up for the 3rd-straight session following the late day run to 1,719. Lower resistance at 1,720-1,735 was challenged but held.

Continued closes above the latter and the 50-day moving average would be a bullish development for additional strength towards 1,740-1,750 with the latter representing mid-July support.

Current and rising support is at 1,700-1,685.

A close below the latter reopens risk towards 1,675-1,660 with the monthly low twice reaching 1,658.

RSI is in a uptrend with resistance at 50.

Continued closes above this level would signal additional strength towards 55-60.

Support is at 45-40 with a move below the latter reopening weakness towards 35-30 and fresh monthly lows.

The iShares PHLX Semiconductor ETF (SOXX) closed in positive territory for the 2nd-straight session after tapping a high of $206.70. Fresh and lower resistance at $206.50-$207 was cleared but held.

Continued closes above $207.50 and prior support from late July would be a bullish signal for additional strength towards the $210-$212.50 area, depending on momentum

Current support is at $204.50-$204.

A close below the latter would signal a false breakout with risk back towards $202.50-$200 and the 50-day moving average.

RSI is in an uptrend with resistance at 55-60 a close above the latter would signal additional strength towards 65-70.

Support is at 50 with downside risk to 45-40 on a move back below this level.

We are allocating the portfolio as follows:

30% in FISV closed on Monday at 107.64
30% in SBUX closed on Monday at 96.66
30% in TTWO closed on Monday at 129.94
10% in TMF closed on Monday at 31.70

For maximum liquidity, we will liquidate (SELL TO CLOSE Options contracts) and initiate any new positions (BUY TO OPEN Options contracts) within the last 20 minutes of the trading session. We will update you after the close in the Members Area Daily Update.

Option Traders – the following (regular monthly) options meet our criteria:

FISV 20DEC $110 Strike Price CALL (Expires December 20, 2019)
SBUX 18OCT $100 Strike Price CALL (Expires October 18, 2019)
TTWO 17JAN $140 Strike Price CALL (Expires January 17, 2020)
TMF21FEB $35 Strike Price CALL (Expires February 21, 2020)

All the best,
Roger Scott.