U.S. markets traded higher across the board for the fifth-straight session and continued all-time highs following Tuesday’s gains. The Russell 2000 closed in positive territory for the eighth-straight session with the Dow tapping its 44th record high for the year.
The S&P has done so 41 times. Materials and Industrials were the strongest sectors, rising 0.4%. Utilities were the sector laggard after falling 0.3%.
Global Economy – European markets traded to a 4-month high following gains for the third-straight session. UK’s FTSE 100 advanced 0.4% while the Belgium20 and France’s CAC 40 gained 0.3%. The Stoxx Europe 600 added 0.2% and Germany’s DAX 30 was unchanged due to a holiday.
The U.K. September Markit/CIPS construction PMI fell 3 points to 48.1, from 51.1 in August, and weaker than expectations of no change at 51.1.
Eurozone August PPI rose 0.3% month-over-month and 2.5% year-over-year, stronger than expectations of 0.1% and 2.3%, respectively.
Asian markets closed mostly higher following better-than-expected economic news from Japan. China and South Korea markets remained closed for holidays. Hong Kong’s Hang Seng Index surged 2.3% while Japan’s Nikkei rallied 1.1%. Australia’s S&P/ASX 200 declined 0.5%.
The Japan September consumer confidence index rose 0.6 to 43.9, stronger than expectations for a gain of 0.2 to 43.5.
Redbook Store Sales were up 4.1% on the year for the week ending 9/30.
U.S. September vehicle sales were sharply higher, led by General Motors 11.9% gain. Ford sales were up 8.7% while Toyota’s surged 14.9% and Nissan’s sales jumped 9.5%. This is confirming post-hurricane replacement demand for both new and used vehicles.
One exception were sales of Fiat Chrysler, which reported a 9.7% drop and a recall of over 700,000 Dodge Durango and Jeep Grand Cherokee SUVs for brake malfunctions. For the month, average auto sales gained 7.2% and slightly above the 6% forecast. The Auto Sales Rate surged to 18.57 million.
Market Sentiment – The iShares 20+ Year Treasury Bond ETF (TLT) opened at $123.92 while testing a low of $123.77. Lower support at $124.25-$124 was breached but held. The rebound to $124.51 failed resistance at $124.75-$125.
The 50-day moving average has leveled out but is trying to curl higher with RSI holding the 40 level.
Market Analysis- The Spider S&P 500 ETF (SPY) traded to a fresh all-time high of $252.98 following last Friday’s breakout from the tight range between $248-$250 that lasted for 13 sessions.
We mentioned continued closes above resistance at $250-$250.25 would be a bullish signal for a possible run towards $252.50-$255, depending on momentum. Rising support is now at $252.25-$252 with a move below $251-$250 signaling a short-term top.
RSI is getting slightly extended above the 70 level but reached 80 in late February.
The iShares Nasdaq Biotechnology ETF (IBB) is starting to show signs of a breakout following Monday’s surge to $338.80, or 1.5%. Today’s high reached $339.40 with resistance at $340 holding.
The pullback afterwards was slightly disappointing but the run to fresh 52-week highs this week cleared multi-year resistance at $338 from December 2015. Continued closes above $340 should lead to a run towards $343-$343.50 and March 2015 resistance. Support is $338-$337.75 followed by $336-$335.
IBB spent the month of September trading in a tight range between $328-$336. A trading range of this magnitude, or 20 sessions, can often lead to a major breakout (or breakdown) once a defined move is made out of this range.
It is important to note, a month latter, IBB made a backtest to the $330 level before eventually zooming to an all-time high near $390 in July 2015.
All the best,