U.S. markets traded to fresh all-time highs on Wednesday’s open but weakened ahead of today’s FOMC announcement to finish mixed. The Dow and S&P 500 closed in positive territory for the second-straight session after peaking at intraday highs of 23,517 and 2,588, respectively.

The Nasdaq tapped a record high of 6,759 while holding the 6,700 but went out with a loss of 0.2%. The Russell 2000 remained volatile following a 0.7% decline and close back below the 1,500 level.

The index has failed to make a lifetime high since peaking just south of 1,515 on October 5th.

Energy and Consumer Staples led sector gainers after rising 1.1% and 0.5%, respectively. The lagging sectors were Utilities, after falling 0.6%, along with Real Estate and Industrials with losses of 0.1%.

Global Economy- European markets continued to show strength with Germany’s DAX 30 closing at a lifetime high after zooming 1.8%. The Belgium20 was higher by 0.5% and the Stoxx Europe 600 gained 0.4%. France’s CAC 40 added 0.2% while UK’s FTSE 100 fell 0.1%.

The UK October Markit manufacturing PMI unexpectedly rose 0.3 to 56.3, stronger than expectations for no change.

Asian markets showed continued strength with South Korea’s Kospi setting another record high after surging 1.3%. Japan’s Nikkei rallied 1.9% while Hong Kong’s Hang Seng Index jumped 1.2%. Australia’s S&P/ASX 200 advanced 0.5% and China’s Shanghai index was up 0.1%.

The China October Caixin manufacturing PMI was unchanged at 51, matching expectations.

U.S. ADP private payrolls increased 235,000 in October. Expectations were for an increase of 210,000.

U.S. MBA mortgage market index sank 2.6%, in addition to a 0.8% dip in the purchase index and 4.5% decline in the refinancing index for the week ending October 27th.

September Construction Spending was up 0.3% versus expectations for a flat month.

October ISM Manufacturing Index at 58.7 versus a forecast of 59.5.

October PMI Manufacturing Index Level checked in at 54.6. Expectations were for a print of 54.5.

Market Sentiment- The FOMC left the 1%-1.25% rate unchanged, as widely expected. There were no surprises as the vote was unanimous at 9-0. The economic outlook was upgraded slightly, with the Fed saying economic activity has been rising at a solid rate despite hurricane-related disruptions.

They went on to say the labor market has continued to strengthen with household spending expanding at a moderate rate. Outside of a pick up in gas prices on hurricane issues, core inflation was still soft.

The near term risks to the outlook are roughly balanced with the statement being consistent with a December tightening.

The iShares 20+ Year Treasury Bond ETF (TLT) was up for the 4th-straight session after making an intraday run to $125.14. Lower resistance at $125-$125.50 was cleared but failed to hold with a move above the latter and the 50-day moving average being a bullish signal. Support remains at $124.25-$124 with a move below $123.50 being a bearish development.


Market Analysis- The Russell 2000 ETF (IWM) continues to trade in a tight range between $147-$150.50 with heightened volatility following the breakout above the former level in late September.

Today’s high tapped $150.59 with the recent all-time high at $150.68. A close above upper resistance at $150.50-$150.75 would be a bullish development for a possible push towards $152-$152.50 over the near-term.

The series of lower highs and lower lows throughout last month remain a concern following the test to $147.22 last Wednesday. Monday’s intraday low tapped $147.39 with today’s low reaching $147.44. A bottom is trying to form at $147.25-$147 with a close below the latter likely leading to additional weakness towards $145 and an up trending 50-day moving average.

RSI is in a downtrend and is trying to hold near-term support at 50. A move below this level would be a bearish development.


The Health Care Select Sector Spider (XLV) is trying to hold support at $81 and prior resistance from late August. This level also represents the triple-top breakout with continued closes below $81 being a bearish development.

Today’s low tapped $81.09 with risk to $80-$79 on continued weakness. Near-term resistance is at $81.75-$82 and the 50-day moving average with additional hurdles at $82.50-$83.

RSI is trying to hold longer-term support at 40-38 and levels that held in August.


All the best,
Roger Scott