U.S. markets got off to a mixed start for the week following ongoing trade concerns and ahead of the midterm elections.
Additionally, FOMC meetings on Wednesday and Thursday this week weighed on investor sentiment.
China’s President Xi Jinping’s came back with some harsh words over the weekend for the U.S. stance on trade while the midterms are expected to shift the congressional balance of power
. Volatility stayed slightly elevated but closed below major resistance at 20 for a 3rd-straight session.
The Dow gained 0.8% after holding positive territory for the majority of the session and reaching a peak of 25,505.
Fresh and lower resistance at 25,600-25,800 held with a close above the latter and the 50-day moving average being a more bullish development.
The S&P 500 traded in a tight 27-point range while adding 0.6%. Resistance at 2,740-2,750 was split but held on the run to 2,744 with continued closes above the latter being a slightly bullish development.
The Russell 2000 dipped a half-point, or 0.03% after testing a midday low of 1,534.
Fresh support at 1,535-1,520 was breached with a close below the latter likely leading to additional selling pressure.
The Nasdaq dropped 0.4% following the pullback to 7,255. Near-term support at 7,250-7,200 held with a move below the latter being a very bearish development.
Energy and Real Estate showed the most sector strength after jumping 1.7%. Financials and Utilities were up 1.6% and 1.4%.
Communication Services and Technology were the only sector laggards after falling 0.4% and 0.1%, respectively.
Global Economy – European markets were slightly weak despite optimism a Brexit deal will soon be reached. News that UK Prime Minister May has secured concessions from Brussels to let her keep all of the UK in a customs union with the European Union helped sentiment.
The Belgium20 was lower by 0.4% while Germany’s DAX 30 and the Stoxx 600 Europe were weaker by 0.2%. France’s CAC 40 slipped less than a point, or 0.02%, while UK’s FTSE 100 climbed 0.1%.
Eurozone November Sentix investor confidence fell 2.6 to 8.8, below forecasts for a print of 9.8.
The UK October Markit/CIPS services PMI was at 52.2, missing estimates of 53.3.
Asian markets were lower across the board after Chinese President Xi Jinping’s comments at a trade show failed to outline any new proposals that would suggest there was an impending resolution to the U.S.-China trade conflict.
Hong Kong’s Hang Seng sank 2.1% and Japan’s Nikkei dropped 1.6%.
South Korea’s Kospi gave back 0.9% and Australia’s S&P/ASX 200 was down 0.5%.
China’s Shanghai was lower by 0.4%.
The China October Caixin services PMI checked in at 50.8, missing expectations of 52.8.
PMI Services Index rose 1.3 points to 54.8 in the final October reading, topping forecasts of 54.7. Prices paid climbed to 57.6 versus 56.6 in September and is the highest in over 5 years.
The October composite index was up 1 point to 54.9, following the 0.8 point decline to 53.9.
ISM Non-Manufacturing Index fell 1.3 points to 60.3 in October, down from a 21-year high of 61.6 in September but still better than estimates of 59.2.
The business activity index fell 2.7 points to 62.5 from 65.2. The employment component dropped 2.7 points to 59.7 from 62.4. New orders slipped to 61.5 from 61.6.
New export orders were unchanged at 61 while Imports slid 4 points to 51 from 55. Prices paid dropped to 61.7 from 64.2.
The TD Ameritrade IMX for October was at 6.1.
Market Sentiment – The iShares 20+ Year Treasury Bond ETF (TLT) rebounded to show some strength after tapping a high of $112.71. Fresh and lower resistance at $112.75-$113.25 held.
Continued closes above $114 would be a more bullish development and signal a possible short-term bottom. New support is at $112-$111.50.
Market Analysis – The Russell 3000 Index ($RUA) closed higher for the 4th time in 5 sessions with Monday’s high tapping 1,619.
Resistance at 1,615-1,625 was split with additional hurdles at 1,640 and the 200-day moving average.
Continued closes back above 1,660 would be a more bullish development and a level that represents mid-October resistance and July to mid-August support.
Shaky support is at 1,600-1,590. A close below 1,580 would be a bearish development with risk towards 1,550-1,540 and late October lows.
RSI is showing signs of curling higher after clearing and holding lower resistance at 45-50.
A close above the latter would signaling additional strength. Support is at 40 with a move below this level likely signaling another trip towards 35-30.
The Consumer Staples Select Spiders (XLP) had been in a tight trading range between $54.50-$55.50 for 4 sessions before Monday’s breakout to $55.95.
Fresh resistance at $56-$56.50 held with continued closes above the latter being bullish for a possible run towards $58-$59 and fresh 52-week peaks.
Rising support is at $55.25-$54.75. A close back below $54.50 would be a slightly bearish signal for lower lows.
RSI is in a slight uptrend with longer-term and upper resistance at 65-70 a major hurdle.
A close above this level would be a continued bullish development signaling additional strength. Support is at 55-50.
All the best,