U.S. markets rebounded from first half lows, led by the reversal in Tech and the strength in Financials.
The major indexes traded in a tight range before a mixed finish as this week’s action is expected to remain choppy during peak earnings.
Over a quarter of the S&P 500 members will be announcing results along with a number of major Dow components and Tech companies.
Volatility remained tame and is still signaling a possible breakout to higher highs.
The Nasdaq gained 0.3% despite trading to a low of 7,776 shortly after the open. Support at 7,800 held for the 8th-straight session.
The rebound to 7,846 came within 21 points of a fresh all-time high.
The S&P 500 was up 0.2% after making a second half run to 2,808. The index held the 2,800 level for the 6th time in 7 sessions after trading in a 13-point range.
The Russell 2000 was higher by 0.1% following a midday push past 1,701.
The index failed to hold the 1,700 level for the 2nd-straight session but is just over 10 points away from fresh all-time highs.
The Dow declined 0.1% after spending the majority of the session underwater while testing a low of 24,983.
The blue-chips held the 25,000 level for the 7th-straight session with a move above 25,215 and last week’s peak signaling additional strength.
Financials rose 1.3% while Tech and Communication Services advanced 0.5% and 0.4%, respectively, to pace sector leaders.
Utilities gave back 0.7% and were the leading laggard. Industrials and Consumer Staples were down 0.6%.
Global Economy – European markets closed mostly lower after the Group of 20 nations expressed concern that trade tensions could threaten expansion in the global economy.
France’s CAC 40 fell 0.4% and UK’s FTSE 100 was down 0.3%. The Stoxx 600 Europe dipped 0.2% while Germany’s DAX 30 slipped 0.1%. The Belgium20 gained 0.5%.
The Bundesbank said the overall economic performance in the spring quarter of 2018 probably showed a little more momentum than at the beginning of the year.
They added global growth remains robust and many emerging-market countries are better prepared to face crises, but risks to the world economy have increased.
Bundesbank went on to say the main risks are rising financial vulnerabilities, heightened trade and geopolitical tensions, global imbalances, inequality and structurally weak growth.
Asian markets were mixed after the People’s Bank of China released guidelines aimed at asset management practices that were deemed less severe than expected.
China’s Shanghai jumped 1.1% and Hong Kong’s Hang Seng added 0.1%.
Japan’s Nikkei sank 1.3% while South Korea’s Kospi and Australia’s S&P/ASX 200 dropped 0.9%.
The Chicago Fed National Activity Index climbed 0.88 points to 0.43 in June after falling 0.94 ticks to -0.45 in May. Forecasts were for 0.23.
The 3-month June moving average rose to 0.16 from May’s 0.10. According to the report, 45 of 85 of the monthly indicators made positive contributions.
Existing Home Sales declined another 0.6% to 5,380,000 n June , a third straight monthly decline, after falling 0.7% to 5,410,000 in May. Expectations were for a print of 5,440,000.
Single family sales declined to 4,760,000 following May’s slip to 4,790,000 while condo/coop sales were steady at 620,000.
The months’ supply rose to 4.3 million from 4.1 million in May, though low inventory remains a problem. Purchases were up in the Northeast and Midwest, and were lower in the South and West.
The median sales price rose to a record high $276,900 from $265,100 and is up 5.2% year-over-year.
Market Sentiment – The iShares 20+ Year Treasury Bond ETF (TLT) showed continued weakness after falling for the 5th time in 6 sessions with Monday’s low tapping $119.18.
Fresh support at $119.25-$119 held with a close below the latter being a continued bearish development.
Lowered resistance is at $119.75-$120 and the 50-day moving average.
Market Analysis – The PowerShares QQQ (QQQ) snapped a 3-session slide despite testing a low of $177.74 shortly after the open. Mid-month support at $177.50-$177 held with a close below the latter signaling additional weakness.
Resistance is at $179.50-$180 held on the rebound to $179.64.
Continued closes above the latter get $182-$182.50 in play and fresh record highs back in the mix.
RSI is giving a neutral reading with near-term support at 60-55.
A move below the latter would suggest additional weakness.
Resistance at 65-70 with continued closes above the latter being a slightly bullish signal.
The Utilities Select Spider (XLU) fell for the 5th time in 6 sessions following the backtest to $51.74. Near-term support at $51.75-$51.25 held.
A close below the latter will likely lead to a further backtest to $51.50-$51 and the 200-day moving average.
Resistance is at $52.50-$53. The 52-week peak is at $57.23. Despite the recent weakness and tight trading range the 50-day moving average remains on track to clear the 200-day moving average in the coming weeks.
This would form a golden cross and is typically a bullish technical pattern for higher highs.
RSI has been in a downtrend with current support at 50.
A close below this level would signal additional weakness towards 45-40. Resistance is at 55-60.
Existing Position Update
Initiated SKX bull put spread.
Plan on initiating another position before week end.