U.S. markets continued their recent pattern of showing strength on the open and weakness afterwards to close Wednesday’s session mixed.
The Nasdaq gained 0.2% to snap a three-session slide while the S&P 500 slipped a third-point, or 0.01%. The Dow declined 0.2% while closing in the red for the fifth-straight session.
The Russell 2000 extended its losing streak to four-straight after sinking another 1.5% while holding the 1,500 level.
Technology and Consumer Staples showed sector strength after rising 0.6% while Utilities gained 0.4%. Energy lead the laggards with the sector falling 1.3%.
Consumer Discretionary and Materials declined 0.6% and 0.5%, respectively.
Global Economy- European markets settled mostly lower as Brexit talks will likely continue into next week following Monday’s dispute over the Irish border that scuttled an agreement.
The Belgium20 dropped 0.5% while Germany’s DAX 30 fell 0.4%. The Stoxx Europe 600 slipped 0.1% and France’s CAC 40 dipped a point, or 0.02%. UK’s FTSE 100 gained 0.3%.
ECB Executive Board member Mersch said the ECB faces the risk of keeping its monetary policy too accommodative for too long as the recovery in the Eurozone continues to develop robustly and employment has increased markedly.
He went on to add that wages, as well as underlying inflation seem to have made a trend reversal.
German October factory orders unexpectedly rose 0.5% month-over-month, stronger than expectations for a drop of 0.2%.
Asian markets also showed weakness with Japan’s Nikkei tanking 2%, or 445 points, after suffering its biggest one-day percentage decline since late March.
Hong Kong’s Hang Seng tumbled 2.1% while Australia’s S&P/ASX 200 stumbled 0.4% and China’s Shanghai gave back 0.3%. South Korea’s Kospi was unchanged.
MBA Mortgage Applications index climbed 4.7%, along with a 2.4% increase in the purchase index and a 9% surge in the refinancing index for the week ending December 1st.
ADP Employment Report increased 190,000 in November, topping expectations for a print of 186,000.
Q3 productivity growth held at the 3% pace, missing expectations for a bump up to a 3.3% estimate of growth. Unit labor costs were knocked down to a 0.2% decline from 0.5% growth.
Market Sentiment- The iShares 20+ Year Treasury Bond ETF (TLT) traded higher for the 4th-straight session after reaching a peak of $128.23 intraday.
Resistance at $127.75-$128 held into the closing bell. Rising support is at $127-$126.50. RSI remains in a slight uptrend and is approaching early November resistance at 60.
Market Analysis-The PowerShares QQQ (QQQ) made a run to $153.74 with resistance at $153.75-$154 holding. A move above $154.50 would be a slightly bullish development and would signal a possible short-term bottom.
Early and mid-November support at $152 has been holding with a move below this level likely leading to $151.50-$151 and a retest of the 50-day moving average.
RSI is trying to hold late October support at 50 with risk to 40 on continued closes below this level.
The Spider Gold Shares (GLD) are testing multi-month support at the $120 level with today’s low tapping $119.87. Continued closes below $120-$119.75 would be a bearish development with additional risk towards the $119-$118.
We highlighted the downward sloping 50-day moving average a few weeks ago and it remains a concern given the back-to-back closes below the 200-day moving average.
Current resistance is at $120.50-$121. RSI has fallen below support at the 40 level with risk to 30 on continued weakness.
All the best,
Roger Scott