WealthPress Daily 11-9-17

The Dow and S&P 500 held near-term support from mid-October on the intraday lows while recouping half their losses into the close.

The Nasdaq held beginning of the month support after taking the hardest hit and briefly falling below the 6,700 level.

Meanwhile, the Russell 2000 held 1,460 on its low and a level that served as prior resistance from the late September breakout.

Industrials were the weakest sector after posting a decline of 1.2% followed by Materials and Technology which fell 0.9% and 0.8%, respectively. Energy showed the most sector strength following its 0.3% gain while Consumer Discretionary rose 0.2%.

Global Economy – European markets traded to the downside despite the European Commission’s upbeat assessment of the economy. Germany’s DAX 30 sank 1.5% and France’s CAC 40 gave back 1.2%. The Belgium20 dropped 1% while the Stoxx Europe 600 and UK’s FTSE 100 fell 0.6%.

The European Commission raised its Eurozone 2017 GDP forecast to 2.2% from a May forecast of 1.7%, and raised its Eurozone 2018 GDP forecast to 2.1% from 1.8%.

ECB Executive Board member Benoit Coeure said nothing would justify the end of ECB monetary support at this point, and the ECB will keep providing support until the Eurozone economy can stand alone.

The German September trade balance widened to a surplus of 24.1 billion euros, higher than expectations of 22.3 billion euros. September exports fell 0.4% month-over-month, less than expectations for a decline of 1.3%.

September imports unexpectedly fell 1% month-over-month, and weaker than expectations of for a gain of 0.3%.

Asian markets closed mixed with Japan’s Nikkei slipping 0.2% after clearing 23,000 for the first time since January 1992. Hong Kong’s Hang Seng Index jumped 0.8% and Australia’s S&P/ASX 200 advanced 0.6%. China’s Shanghai index added 0.4% while South Korea’s Kospi dipped 0.1%.

China October CPI rose 1.9% year-over-year, stronger than expectations for a rise of 1.8% and the fastest pace of increase in 9 months. October PPI rose 6.9% year-over-year, stronger than expectations for a gain of +6.6%.

Japan September core machine orders tumbled 8.1% month-over-month, weaker than expectations for a decline of 2.0%.

Initial jobless claims were up 10,000 to 239,000 in the first week of November. Expectations were for a print of 232,000.

Wholesale sales climbed 1.3% in September versus expectations for a 1% bump, with inventories up 0.3%.

Market Sentiment – Atlanta Fed’s Q4 GDPNow estimate was unchanged at 3.3% from its previous forecast.

The iShares 20+ Year Treasury Bond ETF (TLT) pulled back for the second-straight session with today’s low tapping $125.55. Fresh support at $125.50-$125.25 and the 50-day moving average held with a close below the later being a slightly bearish development. Lowered resistance is at $126.25-$126.50.

Market Analysis- The Russell 3000 Index (RUA) pulled back off Tuesday’s all-time high north of 1,537 following today’s backtest to 1,517. Late October support at 1,520-1,515 held with a move below 1,510 likely leading to additional weakness to 1,500 and an up trending 50-day moving average.

Resistance is at 1,535-1,540 with closes back above 1,530 being a continued bullish development.

RSI is in a downtrend with risk to 50 following the volatility but is trying to hold September support near 60.

The Spider S&P Retail ETF (XRT) made a strong move off late August support at the $38.75 level following today’s 1.6% pop. The 50-day moving average appears to be on track to clear a descending 200-day moving average and would form a golden-cross if completed. This is typically a bullish signal.

However, resistance remains at $40-$40.50 and levels that also need to clear to keep the bullish rebound intact. RSI is back in an uptrend after holding support just above the 30 level.