U.S. markets finished Friday mostly higher while setting record highs with the Dow and S&P 500 working on 8-week winning streaks for the first time in four years.

The Nasdaq is riding a six-week winning streak after gaining 0.7% and was up nearly 1% for the week. The Russell 2000 struggled after spending much of the session underwater while closing slightly lower and ending the week with a 1% pullback.

Sector leaders included Technology and Healthcare with both rising 0.8%. Financials led the sector laggards after falling 0.4%. For the week, the Energy sector rose 2% while Consumer Discretionary fell 0.8%.

Q3 results from 406 S&P 500 members that combined account for 85.4% of the index’s total market capitalization. Total earnings for these companies are up 7.5% from the same period last year on 6.3% higher revenues, with 73.9% beating EPS estimates and 66.7% topping revenue estimates.

Looking at Q3 as a whole, combining the actual results from the 406 S&P 500 members that have come out with estimates for the still-to-come 94 index members, total earnings are expected to be up 6.5% from the same period last year on 5.6% higher revenues.

Excluding the weak results from the Finance sector, total earnings for the rest of the index would be up 9.6% on 6.1% revenue growth.

The Technology sector has been impressive, with Q3 results from 85% of the sector’s market cap in the S&P 500 index. Total earnings for these Tech companies are up 22.4% from the same period last year on 9.3% higher revenues, with 81.8% topping EPS estimates and 86.4% clearing revenue estimates.

Total Q3 earnings for the S&P 500 index are on track to reach a new all-time quarterly record, surpassing the previous record reached in the preceding earnings season.

Global Economy- European markets closed higher while ending the week with solid gains. The Belgium20, Germany’s DAX 30 and the Stoxx Europe 600 gained 0.3% while France’s CAC 40 and UK’s FTSE 100 climbed 0.1%.

ECB Governing Council member Ewald Nowotny said the economy is improving substantially but they were not yet there. He went on to say at some time there will be of course a reducing and some kind of end date to stimulus but that it was too early to have this discussion.

The UK October Markit/CIPS services PMI unexpectedly rose 2 to 55.6, stronger than expectations for a dip of 0.3 to 53.3 and the fastest pace of expansion in 6 months.

Asian markets were mostly higher with Australia’s S&P/ASX 200 gaining 0.5% while closing in on 10-year highs. South Korea’s Kospi and Japan’s Nikkei advanced 0.5% while Hong Kong’s Hang Seng Index was higher by 0.3%. China’s Shanghai index fell 0.4%.

Nonfarm payrolls increased 261,000 in October, which fell short of assumptions for 300,000. The unemployment rate slid to 4.1% from 4.2%.

September International Trade Balance Level widened 1.7% to $43.5 billion versus expectations for a deficit of $43.4 billion.

October PMI Services Index Level was unchanged at 55.3 versus expectations of 55.9.

ISM’s services index edged up to 60.1 in October, beating estimates for a small decline to 58.6.

Factory orders rose 1.4% in September, topping expectations for a rise of 1.2%.

Baker Hughes reported that the U.S. rig count fell 11 rigs from last week to 898.

Market Sentiment – Atlanta Fed’s Q4 GDPNow estimate was cut to 3.3% from a high initial estimate of 4.4%, which is now closer to the NY Fed’s 3.16% forecast.

Minneapolis Fed dove Kashkari said wage growth appears muted and he thinks that Governor Powell will do a great job as Fed Chair. He doesn’t see any major changes in the conduct of monetary policy as a result.

The iShares 20+ Year Treasury Bond ETF (TLT) traded higher for the 6th-straight session while reaching an intraday peak of $125.70. Fresh resistance $125.75-$126 held with a move above the latter signaling continued strength. Rising support is at $125.25-$125 and the 50-day moving average.

RSI remains in a strong uptrend with a move above 60 being a bullish development for a run at 70 and early September resistance.


Market Analysis- The iShares Micro-Cap ETF (IWC) is trying to hold near-term support at $93 after trading to an all-time high of $96.77 in early October. A move below $93 opens up risk to $92.25-$92 and the 50-day moving average.

This area represents the gap high from late September. Current resistance is at $94-$94.50 with a close above $95 being a bullish development.

RSI has been in a downtrend since early October after peaking near the 90 level and appears to be leveling out. A move above 50-55 could lead to continues strength.


The Technology Select Sector Spiders (XLK) traded to a 52-week high of $63.55 on Friday with fresh resistance at $65-$65.50 on continued closes above $63.50.

The all-time intraday high of $65.44 was reached in March 2000. Current support is at $63-$62.50. A close below $62 would be a slightly bearish development leading to a continued backtest towards $61.25-$60 and the late October breakout.

RSI is in overbought territory add is pushing late May resistance just above 80.


The percentage of S&P 500 stocks trading above the 50-day moving average is currently just below the 65% level after peaking north of 77% in late October. There is risk to 60%-58% on continued weakness and an area that held as support throughout September.

Continued closes above 65% could lead to another run towards 70%-75% and the recent 6-month high.

The percentage of Nasdaq 100 stocks trading above the 200-day moving average is currently above 61% after reaching a 6-month low of 58% prior to Friday’s close.

The 1-year chart shows risk to the 55% level from last November on continued weakness and would represent oversold levels. Resistance is at 62.5%-65% with a move above the latter being a bullish development.

All the best,
Roger Scott