U.S. markets opened in negative territory with near-term support holding after trade pessimism crept back into global markets.
While China remains the main focus of trade concerns, deals with Canada and Europe remain in play and helped sparked a rebound shortly afterwards.
The major indexes reached their session highs by midday while holding solid gains throughout the second half of action and into the closing bell.
Volatility also spiked near the 15 level before deflating to keep the market rangebound.
The Nasdaq gained 0.6% after trading to a high of 7,986.
Resistance at 7,950-8,000 was split with the former holding into the close.
The Dow was higher by 0.4% after trading to an intraday high of 26,019. Resistance at 26,000 held and a level that hasn’t been recovered in 8 sessions.
The S&P 500 advanced 0.4% while reaching a lunch time peak of 2,892.
Lower resistance at 2,890-2,900 was cleared but failed to hold with a move above the latter being a more bullish signal.
The Russell 2000 edged up 0.1% following its intraday run to 1,723.
Lower resistance at 1,725-1,730 held with continued closes above the latter being a bullish development.
Communications Services and Energy paced sector leaders after soaring 1.1% and 1%, respectively.
Technology and Consumer Discretionary rose 0.8%.
Consumer Staples and Utilities led sector laggards after falling 0.4% and 0.3%, respectively. Health Care and Industrials were off 0.1%.
Global Economy – European markets were mixed and traded in a tight range despite positive signs of progress between the EU and U.S. on trade talks.
The Trump administration said it will seek fast-track approval from Congress for a trade deal being negotiated with the EU.
France’s CAC 40 advanced 0.3% and the Belgium20 was up a half-point, or 0.01%.
The UK’s FTSE 100 and Germany’s DAX 30 slipped 0.1%. The Stoxx 600 Europe dipped a fifth-point, or 0.05%.
The German September ZEW survey expectations of economic growth unexpectedly climbed 3.4 to 76, topping expectations of 72.
The UK July ILO unemployment rate remained unchanged at 4%, matching forecasts and the lowest in over 43 years.
UK July average weekly earnings rose 2.6% (3-month average/year-over-year), stronger than estimates of 2.4%. July average weekly earnings ex-bonus were up 2.9%, above expectations of 2.8%.
Asian markets were also mixed on a larger scale following news China asked the World Trade Organization (WTO) for authorization to impose trade sanctions on the United States.
Hong Kong’s Hang Seng declined 0.7% while South Korea’s Kospi and China’s Shanghai were down 0.2%.
Japan’s Nikkei jumped 1.3% and Australia’s S&P/ASX 200 rallied 0.6%.
NFIB Small Business Optimism Index was up 0.9 to 108.8 in August, a new record high, after July’s 0.7 point gain to 107.9, which was the prior peak.
There was broadbased strength in the components as plans to hire increased to 26% from 23%, with increased capital spending up at 33% from 30%.
The percentage of businesses believing it is a good time to expand improved to 34% from 32%. Expectations for higher selling prices rose to 17% from 16%.
Plans to increase inventory jumped to 10% from 4%. Positions not able to fill edged up to 38% from 37%.
On the slightly negative side, expectations of a better economy slipped to 34% from 35%, with net compensation plans falling to 21% from 22%.
The JOLTS report showed job openings rose 117,000 to 6,939,000 in July, another new record high, and topping expectations of 6,670,000.
The rate was steady at 4.4% with June revised from 4.3%. Hirings were up 2,000 to 5,679,000 with the rate also unchanged at 3.8%.
Quitters jumped 106,000 to 3,583,000 with the rate increasing to 2.4% from 2.3%. The report represented the 7th-straight job openings figure over 6 million and continues to reflect a very strong labor market.
Wholesale Trade Inventories increased 0.6% in July, with sales unchanged, missing forecasts for a rise of 0.7% and 0.1%, respectively.
The inventory-sales ratio edged up to 1.26 from 1.25.
U.S. chain store sales dropped 2% in the week ending September 8th, after bouncing 0.8% the prior week. However, the annual pace accelerated to 4.4% year-over-year from 3.3%.
Redbook reported sales rose 0.8% last week and posted a 6.3% year-over-year pace, better than forecasts for gains of 0.2% and 5.7%, respectively.
The Atlanta Fed’s Q3 GDPNow estimate was cut to 3.8% from 4.4% previously.
Market Sentiment – The iShares 20+ Year Treasury Bond ETF (TLT) traded in the red throughout the session while making a backtest to $118.60.
Fresh support and the early August lows at $118.50-$118 are back in play with a close below the latter being a continued bearish development.
Lowered resistance is at $119-$119.50. The 50-day moving average is rolling over and is showing signs of falling below the 200-day moving average.
This would form a death cross and is typically a bearish technical signal for lower lows.
Market Analysis – The Spider S&P 500 ETF (SPY) closed higher for a 2nd-straight session after reaching a peak of $289.55.
Near-term resistance at $289.50-$290 held with the late August all-time high at $291.74.
Support is at $287.50-$287 with Tuesday’s low kissing $286.98.
A move below $286.75 would be a slightly bearish development with risk towards the $285 area.
RSI cleared lower resistance at 60-65 with continued closes above the latter leading towards 70-75 and August peak levels.
Support is at 55 with a move below 50 being a bearish development and signaling another short-term top.
The Materials Select Sector (XLB) traded to an opening low of $58.41 with near-term and late August support at $58.50-$58.25 holding.
A close below the latter would be a bearish signal for lower lows.
The rebound to $59.32 and close back above the 200-day moving average was a slightly bullish signal.
Prior resistance at $59.25-$59.50 is back in play with continued closes above the latter being a bullish development.
The 50-day moving average is back in a slight uptrend after rolling over in mid-August.
RSI has been flatlining and is still giving a neutral reading with resistance at 55-60. Support is at 45-40.
Existing Position Update
Interesting how one day can change the entire landscape.
No fill on exiting LRCX.
No fill on exiting QQQ.
Initiated IDTI – most got filled around $1.45 – I recommend putting it a bit lower if you didn’t get filled – maybe near $1.30 area – still plenty of profit.
AMZN is playing ball once again – expecting more upside tomorrow.
If SPY and NASDAQ can take today’s high out – markets will start reaching for old highs once again.
We should see liquidation on QQQ tomorrow if no global tension flare up.
Roger Scott