U.S. markets made another run to fresh all-time highs on Tuesday with the Nasdaq leading the way after gaining 1.1%. The index is just 2% away from challenging the 7,000 level following today’s dash to 6,862.
The Dow and S&P 500 rose 0.7% while clearing 2,600 and 23,600 on their way to record highs before closing slightly below these levels. The Russell 2000 extended its win streak to 4-straight after surging 1% while tapping a lifetime high just south of the 1,520 level.
All of the major sectors finished in the green and were led by Technology and Health Care which rallied 1% and 0.9%, respectively. The Industrial and Consumer Discretionary sectors were up 0.7% and 0.6%.
Global Economy- European markets were higher on hopes that Germany’s Merkel will extricate herself to form a coalition government without calling for new elections.
Germany’s DAX 30 soared 0.8% and the Stoxx Europe 600 advanced 0.4%. France’s CAC 40 and the UK’s FTSE 100 climbed 0.3% while the Belgium20 gained 0.2%.
Eurozone officials familiar with the matter, say the ECB is likely to make small multiple adjustments in its guidance on monetary policy next year rather than any major change in language as it ends QE.
UK October public sector net borrowing rose 7.5 billion pounds, stronger than expectations for a rise of 6.5 billion pounds, and the biggest increase in 6 months.
The UK November CBI trends total orders rose 19 to a 29-year high of 17, stronger than expectations for a gain of 5 to 3.
Asian markets closed in positive territory on optimism that deleveraging efforts by China’s government will not be as strict as expected following the crackdown on shadow banking.
Regulators there also subsequently suspended online small loan approvals. Hong Kong’s Hang Seng Index zoomed 1.9% while Japan’s Nikkei rallied 0.7%. China’s Shanghai Composite climbed 0.6% and Australia’s S&P/ASX 200 was up 0.3%. South Korea’s Kospi rose 0.1%.
The October Chicago Fed National Activity Index Level came in at 0.65 and expectations of 0.20.
Existing Home Sales surged 2% to a 5,480,000 unit rate versus forecasts for a rise of 0.7% to a 5,430,000 unit rate.
Market Sentiment- Fed Governor Powell’s hearings for the position as Fed Chair will be held on November 28th before the Senate Banking Committee, according to that committee.
Expectations are for him to be confirmed shortly thereafter, which suggests that Janet Yellen’s JEC testimony on November 29th on the economic outlook may indeed be her last. On that note, Yellen is speaking this evening at 6pm (EST).
The iShares 20+ Year Treasury Bond ETF (TLT) cleared upper resistance at $126.25-$126.50 after reaching a peak of $127.29 intraday. Continued closes above the latter keeps additional hurdles at $127-$127.50 in play.
Rising support is at $126.50-$126.25. RSI is approaching 60 and a level that served as resistance earlier this month.
Market Analysis- The Spider S&P 500 ETF (SPY) traded to an all-time high of $260.20 to break out of a trading range between $256-$258 that had lasted throughout the month. We mentioned last week continued closes above $258 could lead to a run towards $259.50-$260. This level held in two of the past three sessions before today’s surge and now represents short-term support.
RSI is trying to clear and hold resistance at 65 with a close above this level likely leading towards a run to 70-75. The 65-60 area served as prior support in mid-October and September with a close back below the latter signaling upcoming market weakness.
Spiders S&P Homebuilders ETF (XHB) made a strong move above prior October resistance at $41.50 following Monday’s close above this level. Today’s 52-week high reached $42.24 with multi-year resistance at $43.50-$44.
We mentioned late last month the all-time high is north of $46 that was reached in February 2006 and when XHB started trading.
Current support is at $42-$41.75 with a move back below $41.50 signaling a short-term peak.
RSI is approaching resistance at 70 with a move above this level being a continued bullish development. The mid-October high cleared 80 and the 50-day moving average remains in a strong uptrend.
All the best,
Roger Scott