U.S. markets settled mostly higher on Friday as trade talks between the U.S. and Canada were continued into the upcoming week.
The two sides were trying to reach a self-imposed deadline to get a new NAFTA deal done ahead of the holiday weekend and will met again Wednesday.
After the close, Canada’s foreign minister, Chrystia Freeland, said that progress on a trade deal with the U.S. has been made, and that the U.S. is negotiating with good faith.
She also added that she has agreed with U.S. Trade Representative, Robert Lighthizer, not to make trade negotiations in public.
The Russell 2000 rose 0.5% after tapping another fresh record high of 1,742 ahead of the closing bell.
Lower resistance at 1,740-1,750 held with a move above the latter being a continued bullish development.
The Nasdaq climbed 0.3% while trading to a first half high of 8,119. Resistance at 8,125-8,200 and the all-time peak at 8,133 from the prior session held.
For the week, Tech jumped 2.1% and the small-caps rose 0.9%. For August, the Nasdaq zoomed 5.7% while the Russell soared 4.8%.
The S&P 500 was up less than a point, or 0.01%, after testing a morning peak of 2,906. The index held the 2,900 level for a 3rd-straight session to keep blue-sky resistance open up to 2,925-2,950.
The Dow slipped 0.1% on the intraday backtest to 25,879. Support at 25,800-25,600 remains in play on continued closes below the 26,000 level.
The S&P 500 gained 0.9% for the week while the Dow climbed 0.7% with both indexes higher for the 3rd-straight week. For the month, the S&P surged 3% and the Dow jumped 2.2%.
Real Estate and Consumer Discretionary were higher by 0.4% and led sector strength. Technology and Consumer Discretionary were up 1.8% for the week with the former up 6.8% in August.
Consumer Services sank 1% to lead sector weakness while Energy was lower by 0.8%. Utilities, Consumer Services and Consumer Staples were down 0.5% for the week.
Energy was the only sector laggard in August after giving back 2.9%.
Global Economy – European markets were solidly lower on Friday as uncertainty surrounding U.S. trade policy once again weighed on sentiment.
President Trump seemed to reject Europe’s reported offer to cut tariffs to zero on industrial products including autos.
France’s CAC 40 was lower by 1.3% while the Belgium20 and UK’s FTSE 100 dropped 1.1%. Germany’s DAX 30 gave back 1% and the Stoxx 600 Europe was off 0.8%.
Eurozone August CPI came in at 2.1% year-over-year, slightly weaker than expectations of 2.1%. The August core CPI of 1% was weaker than estimates of 1.1%.
The Eurozone July unemployment rate checked in at 8.2%, and a 10-year low.
Asian markets were mostly lower on concerns President Trump was pushing ahead with tariffs on an additional $200 billion worth of Chinese goods along with threatening to withdraw the U.S. from the World Trade Organization.
Hong Kong’s Hang Seng fell 1% while Australia’s S&P/ASX 200 and China’s Shanghai declined 0.5%.
Japan’s Nikkei slipped 4 points, or 0.02%. South Korea’s Kospi rallied 0.7%.
Consumer Sentiment fell 1.7 points to 96.2 in the final August reading, missing forecasts of 96. Much of the weakness was in the current conditions index, which fell to 110.3 from July’s 114.4.
The consumer expectations component dipped to 87.1 from 87.3 last month. The 12-month inflation index ticked back up to 3% after dipping to 2.9% in July, and is the highest since March 2015.
The 5-year index rose to 2.6% from 2.4% in July.
The Chicago PMI fell 1.9 to 63.6 in August, missing estimates of 63.8. This snapped a streak of four monthly gains, and represents the lowest reading since May.
The 3-month moving average edged up to 64.4 from 64.1.
Baker Hughes reported that the U.S. rig count was up 4 rigs from last week to 1,048, with oil rigs higher by 2 to 862, gas rigs also up 2 to 184, and miscellaneous rigs unchanged at 2.
The New York Fed’s Nowcast Q3 GDP growth estimate was lifted to 1.98% from 1.96% previously.
Market Sentiment – Fedspeak returns in full force after Labor Day with Chicago Fed Evans and St. Louis Fed Bullard speaking on Tuesday and Wednesday.
Minneapolis Fed Kashkari, Atlanta Fed Bostic, and New York Fed Williams are scheduled for talking appearances on Wednesday as well.
Williams is also expected to comment on regional and national economic issues on Thursday.
Boston Fed Rosengren, Mester, and Dallas Fed Kaplan will be making remarks on Friday.
The iShares 20+ Year Treasury Bond ETF (TLT) fell for the first time in three sessions despite Friday’s peak reaching $121.92. Prior resistance at $122-$122.50 held.
The fade to $120.89 afterwards held support at $121-$120.50 and the 50-day moving average.
RSI is trying to hold near-term support at 50. A close below this level would be a bearish signal for a continued backtest towards the 40 area and the early August low.
Resistance is at 55-60.
Market Analysis – The Spider S&P 500 ETF (SPY) tested an intraday low of $289.29 with support at $289.25-$288.75 holding. A move below the latter would be a slightly bearish development with risk towards the $287.50 area.
Near-term resistance is at $290.50-$291 with last week’s all-time high at $290.81.
A move above $291.25 could lead to a melt-up surge towards towards $292.50-$295.
RSI is struggling with resistance at 70-75 with continued closes above the latter leading towards 80-85 and January peak levels.
A move below 60 would be a bearish development.
The iShares PHLX Semiconductor ETF (SOXX) made a push to $190.61 with early June resistance at $190.50-$191 holding into the closing bell.
A move above the latter could get $192.50-$195 in play, depending on momentum, with the latter representing the June peak.
Near-term support is at $189-$188.50 with a close below the latter signaling additional weakness towards $187.50-$187.
RSI is approaching resistance at 65-70 with a move above the latter signaling continued strength. Support is at 60-55.
The percentage of S&P 500 stocks trading above the 50-day moving average closed Friday at 68.84% with the high reaching 69.84%.
Resistance is at 70%-72.50% with last week’s peak falling just south of 76%. This area represented the mid-June peaks on back-to-back sessions.
Support is at 65%-60% with risk to 57%-55% and August lows on a move back below the latter.
The percentage of Nasdaq 100 stocks trading above the 200-day moving average closed at 68.93% and the session peak.
Early July and August hurdles are at 70%-72%.
A move above the latter would be a slightly bullish development for push towards 75%-77% and late February resistance.
Support is at 66% and a level that held on 3 occasions last week.
A move below 65% would likely confirm additional weakness towards the 60% area and the mid-August low.
Existing Position Update
MU appears to be slowly moving in the right direction.
DAL is basing and if doesn’t show downside shortly we will cut the position.
I remain bearish on TLT as the main trend is lower and it’s only a matter of time till the asset reverts there.
AMZN is the only wild card and if I don’t see strong downside reversal on Monday or Tuesday latest we will roll the position over.