U.S. markets rebounded on Thursday while closing higher for the first time this week and snapping multi-session losing streaks.
News that the U.S. and China have intensified efforts to strike a truce at the G20 helped fuel momentum.
The major indexes did set lower lows for the week and was a slight concern as trading was choppy before the bounce off the lows.
Volatility also set a weekly high but held near-term resistance for a 2nd-straight session.
The Nasdaq surged 1.7% following the late day run to 7,272.
Prior resistance at 7,300-7,350 held with more important hurdles at 7,500-7,550 and the 200-day moving average.
The S&P 500 jumped 1.1% after reaching an intraday peak of 2,735.
Resistance at 2,750-2,775 and the 200-day moving average easily held with continued closes above the latter being a slightly bullish signal.
The Dow snapped a 4-session slide after adding 0.8% and tapping a second half high of 25,354.
Fresh and lower resistance at 25,200-25,400 was reclaimed on the close back above the 200-day moving average.
The Russell 2000 soared 1.4% after tapping a session high of 1,524. Lower resistance at 1,525-1,540 held with continued closes back above 1,560-1,580 signaling a possible near-term bottom.
Technology led sector strength after zooming 2.5% while Financials and Energy jumped 1.5%.
Utilities and Real Estate tanked 0.8% to pace sector weakness.
Consumer Discretionary and Consumer Staples slipped 0.2% to round out the losers.
Global Economy – European markets closed mostly lower following ongoing Brexit developments. British Prime Minister, Theresa May, said she had obtained enough support from senior members of her Cabinet for a draft Brexit deal to move forward.
However, pundits say that there are doubts over whether the draft withdrawal agreement will get parliamentary approval.
The Stoxx 600 Europe sank 1.1% and France’s CAC 40 was lower by 0.7%.
Germany’s DAX 30 gave back 0.5% while the Belgium20 declined 0.4%. UK’s FTSE 100 climbed 0.1%.
Eurozone October new car registrations sank 7.3% year-over-year to 1,084,000, although year-to-date new car registrations were up 1.6% year-over-year to 12,828,000.
UK October retail sales ex-auto fuel unexpectedly fell 0.4%, missing expectations for a gain of 0.2%.
UK October retail sales including auto fuel dropped 0.5%, well below forecasts for a gain of 0.2%.
Asian markets closed mostly higher after a report indicated China had outlined a series of trade concessions to the Trump administration.
Hong Kong’s Hang Seng soared 1.8% and China’s Shanghai jumped 1.4%.
South Korea’s Kospi rallied 1% and Australia’s S&P/ASX 200 edged up 0.1%.
Japan’s Nikkei was down 0.2%.
China October new home prices rose 1.02% with prices rising in 65 out of 70 cities versus 64 cities that prices rose in September.
Initial Jobless Claims rose 2,000 to 216,000, topping estimates of 214,000. The 4-week moving average was at 215,250 from 213,750. Continuing claims rose 46,000 to 1,676,000 from 1,630,000 in the prior week.
The Philadelphia Fed Business Outlook Survey plunged 9.3 points to 12.9 in November, much worse than forecasts for a print of 20.
The employment component worsened to 16.3 from 19.5, with the workweek falling to 6.3 from 20.8. New orders fell to 9.1 from 19.3.
Prices paid rose to 39.3 from 38.2, while prices received fell to 21.9 from 24.1. The 6-month general business index fell to 27.2 from 33.8.
The future employment index improved to 32.5 from 30.2 while new orders rose to 46.5 from 43.4, with prices paid at 59.5 from 54.1, prices received at 58.6 from 51.1, and capital expenditures at 36.1 from 25.2.
October Retail Sales were up 0.8% for the headline and 0.7% ex-autos.
The Empire State Manufacturing Survey rose 2.2 points to 23.3 in November, topping expectations of 20, as well. The employment component was 14.1 from 9, with the workweek rising to 9.2 from 0.2. New orders fell to 20.4 from 22.5.
Prices paid rose to 44.5 from 42, with prices received at 13.1 from 14.3. The 6-month outlook index rose to 33.6 from 29.
The future employment gauge rose to 16.6 from 13, with the workweek at 6.6 from 2.5. The future new order index rose to 39.7 from 35.1, while prices paid were 59.1 from 52.9, with prices received at 31.4 from 23.5.
The capital expenditures outlook improved to 24.8 from 16.
Import Prices rose 0.5% in October, while export prices grew 0.4%.
Business Inventories rose 0.3% with sales up 0.4% in September, both matching expectations.
Retailer inventories edged up 0.1% after a revised 0.6% gain while Wholesalers saw inventories climb 0.4% after a revised 0.9% gain.
Manufacturing inventories grew 0.5% after a revised 0.1% gain. As for sales, retailers saw an 0.2% rise, wholesalers grew 0.2% and manufacturers posted a 0.9% expansion.
Atlanta Fed’s Q4 GDPNow estimate was trimmed to 2.8% from 2.9% previously, compared to the 2.6% Blue Chip consensus.
Market Sentiment – Fed Chairman Jerome Powell said he was very happy about the state the economy is in right now, adding that the U.S economy in a good place, and that he believes the economy can grow and grow faster.
Powell said, however, that the Fed is at a point where it has to take risks from moving either too quickly or too slowly more seriously, and he did identify risks to the economic outlook.
He noted a couple of times that the global economy was slowing, which he called concerning.
As far as the slowing housing industry, Powell pointed out it is not simply about rates but also a scarcity of lots and labor. He noted that many Americans have never lived in an environment of high mortgage rates.
Atlanta Fed Raphael Bostic wants to proceed cautiously on rate increases, keeping a keen eye on data to avoid raising rates too far or not enough.
He said the conditions warrant “final steps” in adopting neutral rate policy, which is where analysts want to be, via a tentative approach.
Bostic said he is watching some corners of the credit market, but overall financial conditions are healthy.
The iShares 20+ Year Treasury Bond ETF (TLT) traded to a higher high of $114.54 before closing slightly lower. Resistance at $114.50-$115 and the 50-day moving average held with continued closes above the latter being a slightly bullish signal.
Near-term support remains at $113.50-$113.
Market Analysis – The Spiders Dow Jones Industrial Average ETF (DIA) snapped a 4-session slide after trading to a high of $254.
Fresh and lower resistance at $254-$254.50 held with continued closes back above $255 being a more bullish development.
Shaky support is at $249.50-$249 and the 200-day moving average.
A move back below the latter would be a continued bearish signal with risk towards $247.50-$245 and a retest of the October lows.
RSI snapped out of a downtrend with resistance at 50.
Continued closes above this level would signal additional strength towards 55-60 with the latter representing this month’s peak. Support is at 40 with a move below this level signaling additional weakness.
The Energy Select Sector Spider (XLE) snapped a 5-session skid following the rebound to $66.47. Fresh and lowered resistance at $66.50-$67 held.
Continued closes back above $69 would be a slightly bullish development and signal another possible short-term bottom.
However, the 50-day moving average has fallen below the 200-day moving average to form a death cross.
This is a bearish signal for lower lows with the late October low at $64.37 and Thursday’s low reaching $64.43.
Current support is at $65-$64.50 with a close below the latter getting the $63 level in play and the early February intraday low.
RSI is is back in a slight uptrend with resistance at 40.
Continued closes above this level would signal additional strength towards 45-50. Support is at 35-30.
All the best,
Roger Scott.