U.S. markets showed continued strength throughout Tuesday’s session but settled below record high peaks after pulling back into the closing bell. The Dow showed the most strength after rising 0.4% and trading to an intraday high of 25,439.

The S&P 500 gained 0.1% while trading to an all-time high of 2,759 to extend its win streak to five-straight.

The Nasdaq also rose 0.1% after making a record run to 7,181 to keep its five-session win streak intact. Meanwhile, the Russell 2000 tested a lifetime intraday high north of 1,565 before closing 0.1% lower.

Health Care and Financial were sector leaders after advancing 1.2% and 0.8%, respectively. Real Estate and Utilities were sector laggards after falling 1.1% and 1%.

Global Economy- European markets closed higher following upbeat economic data. France’s CAC 40 and the Belgium20 advanced 0.7% while UK’s FTSE 100 fell 0.5%. The Stoxx Europe 600 rose 0.4% and Germany’s DAX 30 was up 0.1%

The Eurozone November unemployment rate fell 0.1 to a nearly 9-year low of 8.7%, matching expectations.

German November industrial production rose 3.4% month-over-month, stronger than expectations of 1.8% and the biggest monthly increase in 8 years.

The German November trade balance increased to a surplus of 23.7 billion euros, wider than expectations of 21.3 billion euros. November exports jumped 4.1% month-over-month, stronger than expectations of +1.2% and the biggest increase in nearly 3-years.

November imports rose 2.3% month-over-month, stronger than expectations of 0.4%.

Asian markets were mostly higher with Japan’s Nikkei Stock adding 0.6% to settle at a fresh 26-year high. Hong Kong’s Hang Seng climbed 0.4% to clear 31,000 for the first time since 2007 while matching a record 11-session win streak from 1999.

China’s Shanghai gained 0.2% and Australia’s S&P/ASX 200 edged up 0.1%. South Korea’s Kospi dipped 0.1%.

Japan November labor cash earnings rose 0.9% year-over-year, stronger than expectations of 0.6%. November real cash earnings rose 0.1% year-over-year, stronger than expectations of for a drop of 0.1%.

U.S. December NFIB Small Business Optimism Index dropped 2.4% to 104.9, weaker than expected, after jumping 3.6% to 107.5 in November.

Redbook Store Sales up 3.4% for the year in the week ending January 5th.

U.S. November JOLTS report showed job openings fell 46,000 to 5,879,000 versus expectation for a print of 6,038,000. It was the lowest since May, with the rate slipping to 3.8% from 3.9%.

Hirings declined 104,000 to 5,488,000 with the rate also dipping to 3.7% versus 3.8%. Quitters fell 13,000 to 3,174,000 with the rate unchanged at 2.2%.

U.S. chain store sales rose 2.0% to 117.5, after dropping 2.3% in the last week of December. However, compared to the same week last year, sales slipped only marginally to a 3.8% year-over-year pace, versus 3.9% previously.

Market Sentiment- Fed’s Neel Kashkari said too low inflation is a bigger concern than too high a rate. He said he fears the tepid rate is probably sending a real signal and added it’s a global phenomena and not just in the United States.

The iShares 20+ Year Treasury Bond ETF (TLT) fell for the fourth-straight session after tumbling a low of $123.81. Fresh support at $124-$123.50 and the 200-day moving average held with a close below the latter being a continued bearish development.

Lowered resistance is at $124.50-$124.75.

Market Analysis- The Spiders Dow Jones Industrial Average ETF (DIA) traded to a lifetime high of $254.29 with fresh resistance at $254.25-$254.50 holding.

Continued closes above the latter could lead to a run towards $256.50-$257. Rising support is at $252.50-$252 with a move below the latter likely leading to a further backtest towards $250-$248.

RSI has cleared November and December resistance at 80 and is on track to test the 90 level from October on continued strength.

The Dow Jones Transportation Average ($TRAN) tested an all-time high of 11,008 following its sixth-straight up session. New resistance is at 11,100-11,200 on continued strength and closes above the 11,000 level.

Support is at the 10,900-10,800 with a move below the latter signaling a short-term top.

RSI is pushing October resistance at 80 with continued closes above this level being a slightly bullish development.

All the best,
Roger Scott