U.S. markets rallied on Friday while booking weekly gains, as optimism grew that the Republicans appear to have the necessary votes to pass the tax reform bill.
The S&P 500 and Dow jumped 0.9% and 0.7%, respectively, to extend their weekly win streaks to four-straight while tapping fresh record highs.
The Dow rose 1.3% for the week while the S&P 500 added to its half-point gain going into Friday’s session.
The Nasdaq surged 1.2% after setting a fresh all-time high while recovery the 6,900 level for the first time since late November.
It was the second-straight week the index closed higher after rising 1.4%. The Russell 2000 soared 1.6% and gained 0.6% over the week. The small-cap index is less than 1% away from its record close set last month.
All sectors traded higher on Friday and were led by Consumer Staples which rallied 1.9%. Technology and Health Care added 1.5% and were the weekly leaders with gains of 1.5% and 0.8%.
Utilities were the weakest sector after sinking 1.5% followed by Energy’s 0.8% setback.
Global Economy- European markets closed mixed after EU leaders agreed to move on to the second phase of Brexit talks, but warned the ongoing negotiations will be difficult.
UK’s FTSE 100 advanced 0.6% and Germany’s DAX 30 climbed 0.3%. The Belgium20 was up 0.2% while the Stoxx Europe 600 and France’s CAC 40 slipped 0.2% and
The Bundesbank raised its German 2017 GDP forecast to 2.6% from a prior estimate of 1.9% and raised its 2018 GDP forecast to 2.5% from an earlier estimate of 1.7%.
The Bundesbank also kept its German 2017 core inflation estimate unchanged at 1.3% and lowered its 2018 core inflation estimate to 1.6% from a prior estimate of 1.7%.
Asian markets were mostly lower with South Korea’s Kospi bucking the trend after gaining 0.3%. Hong Kong’s Hang Seng tanked 1.1% while China’s Shanghai sank 0.8%.
Japan’s Nikkei fell 0.6% and Australia’s S&P/ASX 200 dropped 0.2%.
The Japan Q4 Tankan large manufacturing business conditions rose 3 to an 11-year high of 25, stronger than expectations of for a rise of 2 to 24.
U.S. December Empire State Manufacturing Survey fell 1.4 points to 18, matching expectations.
U.S. November industrial production rose 0.2%, versus forecasts of 0.3%, with capacity rising to 77.1%, in line with expectations
Baker-Hughes reported the U.S. rig count is down 1 rig from last week to 930, with oil rigs down 4 to 747, gas rigs up 3 to 183, and miscellaneous rigs unchanged.
Market Sentiment- The iShares 20+ Year Treasury Bond ETF (TLT) made a run to $128.59 while closing higher for the third-straight session.
Fresh resistance is at $128.75-$129 with the 52-week peak at $129.57 from early September. Rising support is at $128-$127.75.
RSI is approaching multi-month resistance near 68-70 with a close above the latter being a continued bullish development.
Market Analysis- The Russell 2000 ETF (IWM) is trying to break out of a mini trading range between $150-$152 with Friday’s high reaching $153.25.
Resistance is at $152.75-$153 with continued closes above the latter being a bullish development. Support is at $152-$151.75 with a move back below the latter likely leading to additional weakness to $150-$149.50 and the 50-day moving average.
RSI remains in a slight uptrend with resistance at 60 level.
The Dow Jones Transportation Average ($TRAN) has traded in a tight range over the past six sessions with resistance at 10,450-10,500 and the recent all-time high just above the latter that was set earlier this month.
Support is at the 10,350-10,300 with a move below the latter being a slightly bearish development. RSI has been struggling to clear resistance at 70 with continued closes above this level being a bullish development.
The percentage of S&P 500 stocks trading above the 50-day moving average is at 72% with resistance at 74.5%-75%. This percentage peaked earlier this month near 80%. Support is at 70%-69% with risk to 65% on a move below the latter.
The percentage of Nasdaq 100 stocks trading above the 200-day moving average closed just below the 73% level. Multi-month resistance is at 75%-77.5% with Friday’s high pushing 74.76%.
Support is at 71.5%-70% with a move below the latter signaling upcoming weakness.
All the best,