U.S. markets continued their record setting pace following Monday’s push to fresh all-time highs with the Dow closing higher for the 6th-straight session.
The S&P 500 is working on a 5-session win streak and came within 7 points of clearing the 2,600 level while the Nasdaq missed topping the 6,800 level by 10 points. Meanwhile, the Russell 2000 made an intraday move above 1,500 but closed below this level for the 4th-straight session.
Energy and Real Estate had big days with the sectors rising 2.3% and 1.5%, respectively. Consumer Staples were the weakest link after falling just over 1%.
Global Economy- European markets were mixed with UK’s FTSE 100 setting another record high after gaining a couple of points, or 0.03%. The Belgium20 added 0.2% and the Stoxx Europe 600 gained 0.1%. France’s CAC 40 gave back 0.2% while Germany’s DAX 30 slipped 0.1%
ECB Executive Board member Peter Praet said that a substantial amount of monetary accommodation continues to be necessary to secure the gradual convergence of inflation towards the ECB’s inflation aim.
The Eurozone November Sentix investor confidence rose 4.3 to 34, stronger than expectations for a rise of 1.3 to 31 and the highest level in over 10 years.
Eurozone September PPI rose 0.6% month-over-month and 2.9% year-over-year, stronger than expectations for an increase of 0.4% and 2.7%, respectively.
German September factory orders rose 1% month-over-month and 9.5% year-over-year, stronger than expectations for a decline of 1.1% and gain of 7.1%, respectively.
Asian markets were also mixed with China’s Shanghai index jumping 0.5% and Japan’s Nikkei building on its 21-year high after rising 9 points, or 0.04%. South Korea’s Kospi dropped 0.3% and Australia’s S&P/ASX 200 dipped 0.1%. Hong Kong’s Hang Seng Index slid nearly 7 points, or 0.02%.
October TD Ameritrade IMX Level checked in at 7.40.
Market Sentiment- New York Fed William Dudley did not discuss policy in his speech on Monday but acknowledged again that the Fed’s been a bit surprised by the softness in inflation this year, especially with the economy near full employment.
He continues to see inflation drifting up over time. The Fed may need to get the rate up over 2% to contain inflation, when it does manifest, he added, though that 2% is not a ceiling.
San Francisco Fed John Williams is arguing for price-level targeting and wants a serious debate over a new framework for Fed rate setting. He said it would be optimal to have a decision on the best rate-setting framework before the next recession.
The iShares 20+ Year Treasury Bond ETF (TLT) continues to show strength following today’s run to $126.22. The close above $126 gets fresh resistance $126.25-$126.50 in play. Support remains at $125.25-$125 and the 50-day moving average if $126 fails to hold.
Market Analysis- The PowerShares QQQ (QQQ) traded to an all-time high of $153.85 following a backtest towards $153 on the open. We mentioned continued closes above $152-$152.25, and current support, could lead to a run towards $154.50-$155 over the near-term.
A close below the former would be a slightly bearish development. RSI is nearing June resistance at 75 with a push towards 80 and May resistance coming on continued strength.
The Industrials Select Sector Spider (XLI) is trying to hold near-term support at $71.50-$71.25 and levels that have held since the early October breakout above $71. A move below $71.25 would be a bearish signal for a continued backtest towards $71-$70.50 and the 50-day moving average.
Current resistance is at $72-$72.25. RSI held support at 50 from early September and has flattened out. A move below this level would confirm upcoming weakness.
All the best,
Roger Scott