U.S. markets were sluggish throughout Monday’s session as trade tensions between the U.S. and China remained in focus. Over the weekend, President Trump said the U.S. would only make a deal with China if it was right for America while saying the reporting about U.S. willingness to lift tariffs had been exaggerated.

Additionally, the U.S. bond market was closed in observance of Veterans Day, so trading volume was thinned on the mostly lower close. Volatility was slightly elevated but has been holding a key level of resistance since late October.

The Russell 2000 was down 0.3% after trading to an intraday low of 1,588. Current and upper support at 1,585-1,570 was challenged but held. A close below the latter would be a slightly bearish signal with risk towards the 1,550 level.

The S&P 500 slipped 0.2% after tapping a low of 3,075 shortly after the open. Current and upper support at 3,075-3,050 held with a close below the latter signaling a short-term top with downside risk towards 3,025-3,000 and the 50-day moving average.

The Nasdaq gave back 0.1% following the intraday pullback to 8,425. Upper support at 8,400-8,350 easily held with a close below the latter opening up risk towards 8,300-8,250.

The Dow was up a 10 points, or 0.04%, after showing some 2nd half strength on the run to 27,714 and 3rd-straight record close. Key resistance at 27,750 held with a close above this level and the all-time high at 27,774 signaling additional strength towards 28,000.

Real Estate added 0.2% while Technology and Industrials nudged up 0.1% to round out sectors strength. Utilities and Energy were the weakest sectors after declining 0.6% while Communication Services and Healthcare fell 0.5% and 0.4%, respectively.

Global Economy – European markets settled mostly lower despite better-than-expected GDP news as trade tensions weighed on sentiment.

UK’s FTSE 100 fell 0.4% while Germany’s DAX 30 and the Belgium20 slipped 0.2%. The Stoxx 600 was down a tenth-point, or 0.02%. France’s CAC 40 edged up 0.1%.

U.K. GDP grew by 0.3% in the third quarter, after contracting by 0.2% in the second quarter. Meanwhile, U.K. manufacturing output fell by 0.4% in September compared to August.

Asian markets closed mostly lower as Chinese producer prices contracted at their fastest pace in over 3 years last month.

Hong Kong’s Hang Seng tanked 2.6% and China’s Shanghai sank 1.8%. South Korea’s Kospi fell 0.6% and Japan’s Nikkei gave back 0.3%. Australia’s S&P/ASX 200 rose 0.7%.

China’s producer-price index fell 1.6% in October from a year earlier, versus forecasts for a 1.5% decline, while producer prices fell 1.2% in September from a year earlier.

China’s consumer-price index rose 3.8% in October from a year earlier, above forecasts of 3.5%.

Market Sentiment – The iShares 20+ Year Treasury Bond ETF (TLT) snapped a 2-session slide after trading to a high of $135.39. Near-term and lower resistance at $135.50-$136 was challenged but held with additional hurdles at $137.50-$138.

Current support is at $134.50-$134. A close below the latter would signal additional risk towards $132.50-$132 and late July lows.

Market Analysis – The Russell 2000 ETF (IWM) was down for the first time in 3 sessions following the intraday pulback to $157.88. Current and upper support at $158-$157.50 was breached but held.

A close below the latter would be a slightly bearish signal with backtest potential towards $156.50-$156.

Current resistance is at $159.50-$160. Continued closes above the latter would be a renewed bullish development for a retest towards $161-$161.50 and fresh 52-week peaks.

RSI has flatlined with support at 60. A close below this level would signal additional weakness towards 55-50 with the latter representing the early October support.

Resistance is at 70 and the monthly peak. There is upside potential towards 75 and the February 2018 high on a close above the 70 level.

The Industrials Select Sector Spider (XLI) was up for he 7th-straight session and 12 of the past 13 after trading to an intraday high of $81.93. Near-term and lower resistance at $82-$82.50 was challenged but held.

Continued closes above the latter and last week’s all-time peak of $82.66 would be an ongoing bullish signal for uncharted territory towards the $83.50-$85 area.

Current support is at $81.25-$80.75. A close below the $80.50 level would be a bearish development with risk towards $80-$79.50.

RSI remains in a slight uptrend but overbought territory with resistance at 75 and the February high.

A move above this level would signal additional strength towards 80-85 and January 2018 highs. Support is at 70-65.

All the best,
Roger.