WealthPress Daily 10-30-17

The Dow and S&P 500 closed mildly lower but held near-term support levels that had served as prior resistance. Meanwhile, the Nasdaq started slow but traded to an intraday all-time high of 6,727 before closing just below the 6,700 level.

Real Estate and Energy showed the most sector strength after posting gains of 0.6% and 0.5%, respectively. Healthcare and Consumer Staples led the laggards after falling 1.1% and 0.8%. With October coming to a close, over the past month, Technology the sector leader with a gain of 6.7%.

The Materials and Financial sectors are also up 4.8% and 4.2%, respectively. The Consumer Staples sector has fallen 1.7% over the past month. The only other sector laggard has been Energy with pullback of 1.6%.

Global Economy – European markets were mixed as political tensions in Spain eased after the Spanish government began the process of reasserting control over Catalonia. Germany’s DAX 30 and the Stoxx Europe 600 were up 0.1%.

The Belgium20 fell 0.3% and UK’s FTSE 100 gave back 0.2% while France’s CAC 40 slipped a half-point, or 0.01%.

German September retail sales rose 0.5% month-over-month, matching expectations.

Eurozone October economic confidence rose 0.9 to 114 to a 16-1/2 year high, stronger than expectations for a rise of 0.3 to 113.3.

Asian markets were mostly also closed on both sides of the ledger with Japan’s Nikkei climbing to a fresh intraday and closing 21-year high after rising 0.01%. Australia’s S&P/ASX 200 advanced 0.3% and South Korea’s Kospi was up 0.2%.

China’s Shanghai index declined 0.8% while Hong Kong’s Hang Seng Index was down 0.4%.

Japan September retail sales rose 0.8% month-over-month, matching forecasts.

Personal income rose 0.4% in September, as expected, while spending climbed 1%.

Dallas Fed’s manufacturing index surged 6.3 points to 27.6 in October, marking its highest reading since March 2006. Expectations were for a print of 21.3.

Market Sentiment – President Donald Trump is expected to name Jerome Powell to replace Janet Yellen as the next chairman of the Federal Reserve. Two people familiar with the plans tell The New York Times an announcement could come as soon as Thursday.

The iShares 20+ Year Treasury Bond ETF (TLT) continued to rebound after trading to a high of $124.46. The close above resistance at $124-$124.25 gets fresh hurdles at $125-$125.50 and a downward trending 50-day moving average in play.

Rising support is at $124-$123.50.

 Market Analysis- The PowerShares QQQ (QQQ) broke out to an all-time high of $151.52 last Friday to clear prior resistance at $149. Today’s intraday high tapped $152.19. A prior trading range between $146.50-$149 had lasted throughout the month with the latter now serving as support on a close below $150.50-$150.

Continued closes above $152-$152.25 could lead to a run towards $154.50-$155 over the near-term. RSI is nearing July and mid-October resistance at 70 with a push towards 80 coming on continued strength. This area represents the May and June peaks.

Spiders S&P Homebuilders ETF (XHB) pulled back off a recent 52-week high of $41.57 with current resistance at $41.25-$41.50. Continued closes above the latter could lead towards a surge to $43.50-$44 over the near-term.

The all-time high high is north of $46 that was reached in February 2006 and when XHB started trading.

We mentioned earlier this month the breakout to multiyear highs above prior resistance at $39-$39.25 would be a bullish signal as this area represented June, August and early September resistance.

Current support is at $40.75-$40.50 with a move back below $40.25 being a slightly bearish signal.

RSI is trying to clear resistance at 70 but is in a slight downtrend with a move above this level being a bullish development. The recent high cleared 80 and the 50-day moving average remains in a strong uptrend.