U.S. markets opened higher and stayed strong following the results from the midterm elections, which played out just as Wall Street had expected.

Republicans held the majority in the Senate, while Democrats gained control of the U.S. House of Representatives, raising the prospect of gridlock in D.C. between the two sides.

Lost in the hoopla, the Federal Reserve began its two-day policy meeting today, with a decision due Thursday afternoon.

The market isn’t expecting a change in policy, but traders will be looking for fresh signals from the U.S. central bank on its plans for the rest of the year and beyond.

The Nasdaq zoomed 2.6% while reaching a peak of 7,572. Lower resistance at 7,500-7,525 and the 200-day moving average was cleared and gets fresh hurdles at 7,600-7,650 in play.

The Dow jumped 2.1% after testing a midday high of 26,200. Fresh and lower resistance at 26,000-26,200 was cleared and held with the move above the 50-day moving average being a bullish signal.

The S&P 500 also soared 2.1% following the push to 2,815 intraday.

Fresh and lower resistance at 2,800-2,825 was cleared and held on the move above the 200-day moving average.

The Russell 2000 was higher by 1.7% after trading an intraday high of 1,582.

Upper resistance at 1,575-1,580 was cleared and held into the close to set up a possible run towards 1,600.

Healthcare and Technology led sector strength after surging 3% and 2.9%, respectively. Consumer Discretionary advanced 2.7%.

There were no sector laggards for a 2nd-straight session.

Global Economy – European markets closed higher across the board after retail sales data showed an improvement in September, indicating strong consumer demand.

The Belgium20 zoomed 1.8% and France’s CAC 40 surged 1.2%. UK’s FTSE 100 and the Stoxx 600 Europe rallied 1.1% while Germany’s DAX 30 gained 0.8%.

Eurozone September retail sales were unchanged, missing estimates for a rise of 0.1%.

German September industrial production rose 0.2%, topping expectations of no change.

Asian markets settled mixed.

Australia’s S&P/ASX 200 was up 0.4% and Hong Kong’s Hang Seng climbed 0.1%.

China’s Shanghai declined 0.7% and South Korea’s Kospi was lower by 0.4%. Japan’s Nikkei slipped 0.3%.

Japan September labor cash earnings rose 1.1%, matching expectations. September real cash earnings fell 0.4%, missing forecasts for a drop of 0.3%.

MBA Mortgage Applications tumbled 4% for the week ending November 2nd.

September Consumer Credit checked in at $10.9 billion, well below forecasts of $16.5 billion for the month.

Market Sentiment – The FOMC started its 2-day meeting, and will announce its decision at 2:00pm (EST) on Thursday. No policy changes are expected, neither to the funds rate nor IOER, but increases are expected in December.

The statement shouldn’t differ much from September, with the expectation of the policy shift.

Analysts expect the Fed to again note the strength in the economy, and it will be interesting if the outlook is a little more upbeat. If so, it could be a strong indication for a year-end tightening.

Inflation assessment should remain unchanged from recent prior comments, that have stated on a 12-month basis, both overall inflation and core prices remain near the 2% target, while indicators of longer-term inflation expectations have been little changed.

The iShares 20+ Year Treasury Bond ETF (TLT) traded to a high of $113.40 during the first half of action while holding positive territory throughout the session.

Upper resistance at $112.75-$113.25 was stretched with both levels holding into the closing bell.

Near-term support remains at $112. A close below this level will likely lead to a continued backtest towards $111.50-$110 and fresh 52-week lows.

Market Analysis – The Spiders Dow Jones Industrial Average ETF (DIA) was up for the 3rd straight session after reaching a peak of $261.86 ahead of the closing bell.

Fresh resistance at $262-$262.50 is back in play following the close back above the 50-day moving average.

Rising support is at $260-$259.50. A move back below $257.50 would signal a false breakout.

RSI is in a strong uptrend after clearing resistance at 60.

Continued closes above this level would signal additional strength towards 65-70 with the latter representing early October resistance. Support is at 55-50.

Bitcoin Investment Trust (GBTC) extended its winning streak to 4-straight sessions after making a push to $7.79. Near-term resistance at $7.75 and the 50-day moving average was cleared but failed to gold.
Continued closes back above $8 would be a more bullish signal.

Rising support is at $7.50 with a close back below this level being a bearish development.

RSI is closing in on July resistance at 60. A move above this level could lead to a possible push towards 70 and the April high. Support is at 55-50.

All the best,
Roger Scott.