U.S. markets continued their record setting pace to start the week amid reports of an agreement with Mexico on a new trade deal.
President Trump, who confirmed an agreement with Mexico to replace the NAFTA deal, said he would begin negotiations immediately with Canada.
The continued momentum came on light volume as the end of Wall Street vacations and the summer wind down.
One important note was volatility, which stayed slightly elevated despite higher market highs.
The Dow surged 1% while topping out at 26,067.
Upper resistance at 25,800-26,000 was cleared with fresh hurdles at 26,200-26,400 on continued strength.
The Nasdaq jumped 0.9% following its run just south of 8,025 and fresh all-time high. New resistance is at 8,050-8,150 with continued closes above the 8,000 level.
The S&P 500 rose 0.8% after trading to a lifetime peak of 2,898.
Lower resistance is at 2,900-2,925 held with a close above the former being a continued bullish development.
The Russell 2000 was up 0.2% after testing an intraday record high of 1,737. Lower resistance at 1,740-1,750 held with a move below 1,720 signaling a possible short-term top.
Financial led sector strength after rallying 1.4% while Materials and Industrials added 1.3%.
Communication Services and Technology soared 1% and 0.9%, respectively
Utilities paced sector weakness after falling 0.6%. Real Estate gave back 0.2%.
Chicago Fed National Activity Index slipped 0.35 points to 0.13 in July, below estimates of 0.38.
According to the report, 36 of 85 of the monthly indicators made positive contributions, while 49 made negative contributions.
Dallas Fed Manufacturing Survey fell 1.4 points to 30.9 in August, topping forecasts for a print of 28. The employment index was steady at 28.9, though the hours worked index sank to 19 from 22.2.
The company outlook index rose to 27.3 from 20.4, while production dipped 0.1 to 29.3 from 29.4.
New orders rose to 23.9 from 23.3. Prices paid and received slowed, with the prices paid falling to 45.3 from 48.6, and the latter dropping to 15.3 versus 22.9.
The 6-month outlook index fell to 34.7 versus 36.2, with most components registering some slowing. Employment rose to 42.2 from 39.9.
Market Sentiment – The iShares 20+ Year Treasury Bond ETF (TLT) traded in negative territory throughout the session following the backtest to $121.52.
Lower support at $121.75-$121.50 held. A move below the latter to could to a further backtest to $121-$120.50 and the 50-day moving average.
Lowered resistance is at $122-$122.25.
Market Analysis – The Russell 2000 ETF (IWM) was up for the 7th time in 8 sessions after reaching a record peak high of $172.94.
Fresh resistance at $172.50-$173 held with a move above the latter getting $174.50-$175 in play.
Rising support is at $171-$170.50. A close below $170 would likely signal a short-term top.
RSI is back in a slight uptrend with July resistance at 65 followed by June hurdles at 70-75.
Near-term support is at 60 with a move below 55 confirming additional weakness.
The Dow Jones Transportation Average ($TRAN) tested a high of 11,457 with last week’s resistance at 11,450-11,500 holding.
Continued closes above the latter could lead to a run towards 11,700-11,800 over the near-term.
Short-term support is at 11,300-11,250.
A move below 11,200 would signal a possible peak with risk to 11,800-10,800 and the 50-day moving average.
RSI is pushing mid-month resistance at 70 with continued closes above this level being a bullish signal for higher highs.
Support is at 60 with a move below this level being a slightly cautious signal.
Volatility Index – The S&P 500 Volatility Index ($VIX) stayed slightly elevated throughout the session despite the market rally with the high reaching 12.48.
Lower resistance at 12.50-13 held. A move above 13.25-13.50 and the 50-day moving average would be a bearish development and signal a possible market peak.
Support remains at 12-11.50.
The Profit Trends portfolio is allocating:
70% in ZIV closed on Monday at 78.96
30% in EDV closed on Monday at 114.75
All the best,
Roger Scott.