U.S. markets returned to record highs following some solid economic numbers and additional support on the Senate tax reform bill. The Dow reached an all-time high of 24,327 after zooming 1.4% while the S&P 500 tapped a lifetime peak of 2,657 after rising 0.8%.

Both indexes extending their monthly winning streak to 8-straight.

The Russell 2000 made a record run to 1,551 before slipping into negative territory by a point ahead of the closing bell.

The index held a 2-point gain, or 0.1%, but worth noting as the small-caps will likely lead the action on a tax vote possibly tonight or ahead of Friday’s market close. Meanwhile, the Nasdaq recovered half of its prior session losses after jumping 0.7% but failed the 6,900 level.

All major sectors showed strength with Industrials and Energy surging 1.6% and 1.5%, respectively. Consumer sTaples and Technology rallied 0.9%.

Global Economy- European markets were lower across the board despite upbeat economic news. UK’s FTSE 100 stumbled 0.9% and France’s CAC 40 fell 0.5%. The Belgium20 dropped 0.4% while Germany’s DAX 30 and the Stoxx Europe 600 slipped 0.3%.

The Eurozone October unemployment rate unexpectedly fell 0.1 to 8.8%, better than expectations of no change at 8.9%.

The Eurozone November CPI estimate rose 1.5% year-over-year, weaker than expectations for a rise of 1.6%. November core CPI rose 0.9% year-over-year, unchanged from October and weaker than forecasts for a gain of 1%.

The German November unemployment change fell 18,000 to 2,476,000 and stronger than expectations for a drop of 10,000. The November unemployment rate was unchanged at 5.6%, as expected.

German October retail sales fell 1.2% month-over-month, weaker than forecasts for a rise of 0.3% and the biggest decline in 13 months.

Asian markets also closed mostly in the red with South Korea’s Kospi the weakest link after sinking 1.6%. Hong Kong’s Hang Seng tumbled 1.5% while Australia’s S&P/ASX 200 declined 0.7% and China’s Shanghai gave back 0.6%. Japan’s Nikkei bucked the trend after advancing 0.6%.

The China November manufacturing PMI unexpectedly rose 0.2 to 51.8, stronger than expectations for a dip of 0.2 to 51.4.

Initial jobless claims dropped 2,000 to 238,000 for the week of November 25th, missing expectations of no change at 240,000.

Personal income rose 0.4% in October, which was a tick better than the 0.3% expected, with spending up 0.3%, matching forecasts.

The Chicago PMI fell 2.3 points to 63.9 in November, topping expectations for a print of 63.5.

Market Sentiment – Dallas Fed Robert Kaplan said the FOMC faces the challenge of full employment and low inflation while adding an aging population and labor participation were top concerns as well, with another big threat coming from technology disruptions.

On policy, he reiterated the FOMC should gradually and patiently raise the funds rate.

Fed Governor Randal Quarles warned that digital currencies may create serious financial stability issues if widely adopted.

He’s particularly concerned that central bank digital currencies could face money laundering and cyber attack issues, which would require extensive review before being adopted.

The Atlanta’s Fed’s GDPNow model forecast for real GDP growth was adjusted lower in the fourth quarter of 2017 at 2.7% on November 30th, down from 3.4% on November 22nd.

The iShares 20+ Year Treasury Bond ETF (TLT) fell for the second-straight session after testing a low of $124.44. Lower support at $125-$124.50 was stretched, but held, along with the 50-day moving average into the closing bell.

There is risk to $124-$123.50 on a close below $124.50. Lowered resistance is at $125.25-$125.50.


Market Analysis- The Spider S&P 500 ETF (SPY) traded to an all-time high of $266.05 with fresh resistance at $266-$266.25. Continued closes above the latter could lead to a run towards $267-$267.50.

Rising support is at $263.50-$263.25. A move back below the latter would likely lead to a retest of $262-$260 to retrace the gaps higher this week.

RSI is nearing October resistance near the 80 level is approaching overbought territory.


The Energy Select Sector Spider (XLE) surged 1.5% and above its 50-day moving average after reaching a peak of $69.23. Fresh resistance is at $69.25-$69.50 with a move above the latter being a continued bullish development.

We mentioned earlier this month it would be important for XLE to recover the $67.50-$67.75 area to show momentum has returned with rising support now at $68.50-$68.25.

RSI is back in a strong uptrend after clearing mid-month resistance at the 50 level and appears on track to challenge 70 on continued strength.


All the best,
Roger Scott