U.S. markets opened higher following solid earnings reports from several members of the Dow that propelled the index to another fresh intraday and closing all-time high. The S&P 500 and Nasdaq settled with slight gains but stalled in their efforts in making new record highs with the latter failing the 6,600 level.

The Russell 2000 also showed some strength after recovering the 1,500 level. The Financials were the strongest sector after rising 0.7%, followed by Industrials and the Material sector with both rising 0.6%. Health Care led the sector laggards with a decline of 0.7%. Real Estate and Consumer Staples were the other two decliners, falling 0.6% and 0.4%, respectively.
Global Economy – European markets were mixed ahead of the ECB meetings on Wednesday and Thursday. France’s CAC 40 gained 0.2% while Germany’s DAX 30 rose 0.1%. UK’s FTSE 100 was up 2 points, or 0.03%. The Belgium20 slipped 0.2% and the Stoxx Europe 600 fell 0.4%.
Germany’s October Markit/BME manufacturing PMI fell 0.1 to 60.5, stronger than expectations for a decline of 0.6. The October Markit services PMI fell 0.4 to 55.2, weaker than expectations for a dip of 0.1.
The Eurozone October Markit manufacturing PMI unexpectedly rose 0.5 to 58.6, stronger than expectations for a decline of 0.3.
Asian markets were mostly higher with Hong Kong’s Hang Seng Index lagging for the second-straight session after giving back 0.5%. Japan’s Nikkei closed higher for the 16th-straight session after gaining another 0.5%. Australia’s S&P/ASX 200 climbed 0.1% and China’s Shanghai index added 0.2%. South Korea’s Kospi was up a half-point, or 0.02%.
For the week ending 10/21, Redbook Store Sales were up 3.5% for the year.
U.S. Markit’s PMI Composite Flash index rose 1.4 points to 54.5 in October. The services index rebounded 0.6 points to 55.9 after falling 0.7 points to 55.3 in September.
The Richmond Fed manufacturing index fell 7 points to 12 in October, versus expectations for a reading of 17.
U.S. chain store sales bounced 2.0% to 116.9 in the week ended 10/21.
Market Sentiment – The iShares 20+ Year Treasury Bond ETF (TLT) traded in negative territory throughout the session while bottoming at $123.15. Support at $124-$123.50 failed to hold and now represents short-term resistance. A close below $123 would be a bearish development likely leading to a continued backtest to $122 and the 200-day moving average.
Market Analysis- The Spiders S&P MidCap 400 ETF (MDY) made a breakout above $332 following a tight range between $329-$331.75 since the beginning of the month. We mentioned a possible run towards $334-$335 could occur on continued closes above $332 with the recent all-time high at $333.83. Support has moved up to $332-$331.75 with a move back below the latter being a slightly bearish development.
RSI recently peaked near 80 and a level that represented the highs in November and December 2016. Continued closes above the 75-76 level could lead to another retest into the 80’s. A move below the 70 level could signal upcoming weakness.
The Spider Gold Shares (GLD) is trying to form a base of support at the $121 level following the failed breakout above the 50-day moving average. There is risk to $120-$119.75 and the 200-day moving average on a close below $121. Today’s low tapped $120.98. Resistance is at $121.75-$122.
RSI remains in a downtrend with support at the 40 level. A move below this level would likely signal additional weakness in GLD.
All the best,
Roger Scott