U.S. markets showed continued momentum on optimism that a U.S./Canada trade deal can be reached over the near-term.
There are reports Canada is ready to make concessions on dairy for compromises in other areas.
Tech led the way higher while the blue-chips lagged with all-time highs still on hold. Volatility settled a bit but remains subdued with near-term support and resistance levels holding tight.
The Nasdaq jumped 1% to extend its win streak to 4-straight sessions while trading a fresh all-time high of 8,113. Blue-sky resistance at 8,050-8,150 was split with the former holding into the closing bell.
The Russell 2000 rose 0.4% after trading in an 13-point range while tapping another high of 1,737 intraday. Fresh resistance at 1,740-1,750 remains in play on continued strength.
The S&P 500 soared 0.6% after trading to a midday and record high of 2,916.
Lower resistance at 2,900-2,925 was cleared and held with a move above the latter getting 2,950-2,975 in play.
The Dow added 0.2% despite some early weakness while reaching a peak of 26,167 afterwards. Lower resistance at 26,200-26,400 held for the second-straight session.
Consumer Discretionary showed the most strength after soaring 1.1%.
Technology soared 0.9% and Materials rallied 0.8%.
Real Estate declining 0.2% while Financials dipped 0.04% and were the only sector laggards.
Global Economy – European markets showed strength despite news the Italian government is seeking a new round of bond purchases from the ECB to help them avoid a downgrade of its credit rating.
The Stoxx 600 Europe, Germany’s DAX 30, and France’s CAC 40 rose 0.3%.
The Belgium20 was up over a point, or 0.04%. UK’s FTSE 100 dropped 0.7%.
The German September GfK consumer confidence unexpectedly fell 0.1 to a 15-month low of 10.5, missing forecasts for no change at 10.6.
Asian markets were mostly higher with markets in Japan and South Korea extending lengthy winning streaks.
Australia’s S&P/ASX 200 rose 0.8% while South Korea’s Kospi gained 0.3% to extend its winning streak to 9-straight sessions.
Hong Kong’s Hang Seng and Japan’s Nikkei were up 0.2% with the latter index up 7-straight sessions. China’s Shanghai declined 0.3%.
Japan August consumer confidence slipped 0.2 to a 1-year low of 43.3, matching expectations.
MBA Mortgage Applications were down 1.7%, accompanied by a 0.9% drop in the purchase index and a 3% decline in the refinancing index for the week ending August 24th.
The average 30-year fixed mortgage rate fell 3 basis points to 4.78%.
Q2 GDP was revised up to a 4.2% growth rate, from 4.1% in the Advance report and a 2.2% clip in Q1. Expectations were for a print of 4%. Last quarter’s consumption pace was bumped down to 3.8% from 4% previously.
Business fixed investment was boosted to 6.2% versus the prior 5.4% reading, with Q2 nonresidential spending up 8.5% versus the advance print of 7.3%, while residential spending was revised down to -1.6% versus -1.1%.
Government consumption was edged up to 2.3% from the prior 2.1% Q2 rate.
Corporate Profits after-tax were up 6.7% for the year.
July Pending Home Sales were down 0.7%, missing forecasts of no change.
July Farm Prices were down 4.3%.
Market Sentiment – Richard Clarida was confirmed as Fed Vice Chairman late yesterday, and he will assume the remainder of an unexpired 14-year term as governor term that expires in 2022.
Clarida supported Chairman Powell’s views in his confirmation hearing, but has voiced concern over the narrowing in the yield curve and its correlation with recessions.
The iShares 20+ Year Treasury Bond ETF (TLT) snapped a 2-session slide after testing a high of $121.14. Lower resistance at $121-$121.50 held with a move above the latter signaling continued strength.
traded in negative territory for the 2nd-straight session while bottoming at $120.68 intraday. Support is at $120.75-$120.25 and the 50-day moving average.
A close below $120 and the 200-day moving average would be a slightly bearish development.
Market Analysis – The Spider Small-Cap 600 ETF (SLY) showed strength for the 4th-straight session after trading to a high of $78.02. Fresh resistance at $78-$78.25 held with the latter representing Monday’s all-time peak.
A close above the latter could lead to a run towards $79.50-$80.
Short-term support is at $77.50-$77. A move below the later would suggest a possible short-term top with risk to $76.50-$75.
RSI is struggling with resistance at 70-75 with the latter representing June highs. Support is at 65-60.
The Health Care Select Sector Spider (XLV) closed in positive territory for the 4th-straight session after tapping an all-time high of $92.96. Fresh resistance at $93-$93.50 held.
We mentioned at the beginning of the month continued closes above $92 would represent a possible double-top breakout with blue-sky territory towards $93-$95.
Current support is at $92-$91.50 with a close below the latter signaling additional weakness and a possible short-term top.
RSI has cleared major resistance at 80 and January peaks.
There is a chance for a run towards 85-90 but indications are signaling way overbought levels.
Support is at 80 fails with a move below 75 signaling additional weakness and a near-term top.
Current Position Update
MU is showing more downside – can you imagine if the market was weak today?
My timing on AMZN was horrific – [in hindsight] but I’m expecting price to trade lower before expiration – since RSI is at record overbought levels and price is penetrating BB on the up side.
DAL didn’t participate in the tech rally for obvious reasons and appears to be ready to sink.
TLT is flat for the session.
The AMZN position entered reminds me of the TSLA position – the one that went against us 25 dollars immediately after entry…but managed to expire worthless.
The current volatility is uncharacteristic for August. Will be interesting to see what September brings. I’m betting for minor corrective pressure before we head higher closer to end of the year.