U.S. markets opened higher but began to lose some steam in early morning action following 2 days of solid gains.

However, an optimistic tweet from President Trump about trade talks with China renewed strength with the market extending its rally to a third-straight session.

Trump tweeted he had a long and very good conversation with President Xi Jinping of China said they talked about many subjects, with a heavy emphasis on trade.

He added those discussions were moving along nicely with meetings being scheduled at the G-20 meetings in Argentina.

The Russell 2000 rocketed 2.2% while making a run to 1,547. Fresh and lower resistance at 1,550-1,560 held with a close above the latter being a continued bullish signal.

The Nasdaq zoomed 1.8% after testing a session high of 7,435.

Fresh resistance at 7,450-7,500 held with a close above 7,525 and the 200-day moving average being a continued bullish signal.

The S&P 500 soared 1.1% while tapping a high of 2,741 ahead of the closing bell.

Lower resistance at 2,735-2,750 was split with the latter holding into the close.

The Dow also jumped 1.1% after trading a late session peak of 25,396.

Lower resistance at 25,350-25,400 was cleared and held with the close above the 200-day moving average being a bullish development.

Materials surged 2.8% to lead sector strength while Consumer Discretionary rallied 2%. Industrials rose 1.7% while Healthcare popped 1.3% higher.

Utilities were the only sector laggard after giving back 0.4%

Global Economy – European markets closed on both sides of the ledger following ongoing Brexit developments and news on lending rates.

U.K. Prime Minister Theresa May has agreed on terms with Brussels that would give British financial services firms continued access to European markets post-Brexit.

The Belgium20 zoomed 1.6% while the Stoxx 600 Europe gained 0.4% and Germany’s DAX 30 edged up 0.2%. France’s CAC 40 and UK’s FTSE 100 dipped 0.2%.

The Bank of England left its key lending rate unchanged at 0.75%.

Asian markets closed mixed despite an important economic indicator out of China coming in above expectations.

Hong Kong’s Hang Seng surged 1.8%.

Australia’s S&P/ASX 200 added 0.2% and China’s Shanghai climbed 0.1%. Japan’s Nikkei dropped 1.1% while South Korea’s Kospi fell 0.3%.

The Caixin-IHS Markit October Purchasing Managers’ Index, came in at 50.1 for October, topping expectations for a reading of 49.9.

Challenger Job-Cut Report for October announced layoffs of 75,644, up 20,400 from September. Compared to last October, planned job cuts are up 153.6% year-over-year versus 70.9% for September.

Jobless Claims were at 214,000 for the week ending October 27th, versis estimates of 212,000. The 4-week moving average edged up to 213,750 from 212,000.

Continuing claims dropped 7,000 to 1,631,000 in the week ending October 20th, are at the lowest since July 1973.

Productivity slowed to 2.2% in Q3, a little weaker than forecasts of 2.3%. Unit labor costs bounced 1.2%, stronger than expected. Output grew 4.1% versus 5% in Q2.

Hours worked slipped to a 1.8% pace versus 2%. Compensation per hour rose to a 3.5% rate from 1.9% previously. Real compensation was up 1.4% from the prior 0.3%.

The price deflator was 1.4% compared to 3.6% in Q2. Compared to Q3 2017, productivity was steady at 1.3% year-over-year, while unit labor costs slowed to 1.5% versus 1.9%.

October PMI Manufacturing Index was at 55.7, missing estimates of 55.9.

ISM Manufacturing Index for October checked in at 57.7, below,forecasts of 59.1. The employment component declined 2 points to 56.8 from 58.8, and is off of the 6-month average of 57.2.

New orders slid 4.4 points to 57.4 from 61.8 and is also below the 62 average. New export orders declined 3.8 ticks to 52.2 from 56, with imports dipping 0.2 to 54.3 from 54.5.

One of the few increases came from prices paid, which jumped 4.7 points to 71.6 from 66.9, but down from 79.5 in May and is below the 73.4 six-month average.

September Construction Spending was flat at 0.0% followimg a 0.8% rise in August, and below expectations for a rise of 0.2%.

Residential spending rebounded 0.5% following August’s 0.4% decline while nonresidential spending fell 0.3%, after bouncing 1.8% previously.

Private spending was up 0.3% versus the prior 0.4% gain. Public spending dropped 0.9% versus August’s 2.2% gain.

Market Sentiment – The iShares 20+ Year Treasury Bond ETF (TLT) was down for the 4th-straight session after testing a low of $112.84.

Fresh support at $112.75-$112.25 held following the breakdown out of the recent trading range.

The recent and early October low tapped $112.61 with risk to $112-111.50 on a close below $112.50.

Lowered Resistance is at $113.50-$114.

Market Analysis – The PowerShares QQQ (QQQ) was up for the 3rd-straight session after making a late day push to $172.24. Near-term and fresh resistance at $172.50-$173 held.

The close above the 200-day moving average was a bullish development with a move above $174 and prior late July support signaling signaling additional strength.

Rising support is at $170-$169.50 held with a move below $168 signaling a near-term top.

RSI is back in an uptrend with resistance at 50.

Continued closes above this level would signal additional strength for a possible run towards 55-60 and the late September peaks. Support is at 45-40.

The Real Estate Select Sector Spider (XLRE) closed higher for the 3rd time in 4 sessions after trading up to $32.31.

Fresh resistance at $32.25-$32.50 held with a move above the latter and the 50-day moving average being a continued bullish development.

Support is at $31.75-$31.50. A close below the latter opens up risk to $31.25-$31 and the 200-day moving average.

RSI is trying to clear resistance at 55. A close above this level could lead to a push toward 60 and the early September peak.

Support is at 50-45 with a move below the latter signaling additional weakness.

Current Position Update

Market becoming increasingly bullish once again.

SBUX and AAPL report tonight.

I’m expecting bit more upside – with slight resistance near the 200 day line.

AAPL is going to set tone for tech next few sessions – it’s time to buckle up.

Roger Scott