U.S. markets opened in positive territory on Monday while trading mostly higher throughout the session ahead of the busiest week of the 2Q earnings season.
The blue-chips and small-caps experienced some choppiness afterwards but settled higher along with the overall market.
Geopolitical tensions and trade talks remain in focus but volatility eased while closing just outside a key support level.
Fedspeak will ease this week during a quiet period and ahead of next week’s decision on interest rates.
The Nasdaq rallied 0.7% after testing a high of 8,218 ahead of the closing bell.
Current and lower resistance at 8,200-8,275 was cleared and held with the recent all-time high at 8,264.
The S&P 500 was up 0.3% following the afternoon run to 2,990.
Prior and lower resistance at 3,000-3,025 held for the 3rd-straight session with the record high from earlier this month at 3,017.
The Dow edged up 0.1% following the opening push to 27,227.
Prior and lower resistance at 27,250-27,500 held with last Tuesday’s record high at 27,398. A close below the 27,00 level would be a slightly bearish signal with Monday’s intraday low tapping 27,088.
The Russell 2000 gave back 0.2% after trading in an 11-point range while closing a point off its session low of to 1,543.
The fresh monthly session low held crucial support at 1,540-1,535 and the 50-day moving average.
Technology showed the most sector strength after soaring 1.2% while Real Energy and Communication Services advanced of 0.4%. Consumer Staples were the weakest sector after falling -0.6% while Materials, Healthcare and Utilities declined -0.2%.
Global Economy – European markets showed slight gains ahead of the European Central Bank’s decision on interest rates on Thursday.
The Belgium20 rose 0.8% and France’s CAC 40 added 0.3%. Germany’s DAX 30 climbed 0.2% and UK’s FTSE 100 and the Stoxx 600 edged up 0.1%.
Asian markets finished in the red following the debut of the STAR market in Shanghai on Monday along with elections in Japan over the weekend.
Hong Kong’s Hang Seng dropped 1.4% and China’s Shanghai fell 1.3%.
Japan’s Nikkei slipped 0.2% while South Korea’s Kospi and Australia’s S&P/ASX 200 dipped 0.1%.
Prime Minister Shinzo Abe’s ruling coalition secured a majority in Japan’s upper house of parliament in elections but will not reach the super-majority needed to propose constitutional revisions.
Chicago Fed National Activity Index ticked up 0.01 points to -0.02 in June, missing forecasts for a flat reading.
The index has been in negative territory since November with the 3-month moving average inching up to -0.26 versus -0.27.
Forty of the 85 indicators made positive contributions, while 45 had negative impacts.
Market Sentiment – The iShares 20+ Year Treasury Bond ETF (TLT) held positive territory throughout the session while reaching an intraday peak of $132.49. Prior and lower resistance at $132-$132.50 was cleared but held.
A close above the latter would be an ongoing bullish signal with additional hurdles at $133.50-$134.
Current support is at $131.50-$131.
A move below the latter would be a slightly bearish signal with risk towards $130.50-$130 and the 50-day moving average.
Market Analysis – The Spider Small-Cap 600 ETF (SLY) fell for the 3rd time in 4 sessions after tapping a fresh monthly low of $66.57. Near-term and upper support at $66.50-$66 held.
A close below the latter and the 50/200-day moving averages would signal additional risk towards $65.50 and late June support.
Current and lower resistance at $67-$67.50 was challenged but held on the intraday rebound to $67.16.
Continued closes above the $68 level would be a more bullish signal a near-term bottom is in.
RSI remains in a slight downtrend after failing upper support at 50-45.
A move below the latter would be an ongoing bearish development with additional weakness towards the 40 area and early June support. Resistance is at 55-60.
The Health Care Select Sector Spider (XLV) closed lower for the 2nd-straight session following the intraday pullback to $91.49. Near-term and upper support at $91.50-$91 was tripped but held.
A close below $90.50 and the 50-day moving average would signal additional weakness towards $90-$89.50 and the 200-day moving average.
Lowered resistance is at $92-$92.50.
Continued closes above $93 would be a more bullish signal for renewed strength. The 50-day moving average cleared the 200-day moving average earlier this month to form a golden cross. This is typically a bullish signal for higher highs.
RSI is trying to level out with support at 45-40.
A close below the latter and late May support would signal additional weakness towards 35-30. Resistance is at 50-55.
All the best,