U.S. markets opened higher on Friday but turned mixed a short time afterwards with the Nasdaq crossing into negative territory.

In a reversal of the recent divergence, the Nasdaq lagged while the Dow lead, breaking its eight-session losing streak.

Oil prices moved higher after the OPEC production agreement wound up being less than feared.

Volatility settled back down but remains slightly elevated as the major indexes finished the week with losses.

The Dow gained 0.5% after testing a high of 24,663 but fell shy of recovering its 50-day moving average.

The S&P 500 climbed 0.2% after reaching a peak of 2,764 while recovering major support at 2,750.

For the week, the Dow was down 2% and the S&P 500 fell 0.9%.

The Nasdaq slipped 0.3% following a backtest to 7,679 and close back below the 7,700 level.

The Russell 2000 dipped 0.2% after failing short-term resistance at 1,700 while trading to a low of 1,680.

The Nasdaq gave back 0.7% for the week while the Russell 2000 was was up 0.1%.

Energy zoomed 2% and Materials added 1.4% to lead sector strength. Financials and Technology were lower by 0.5% and 0.3%, respectively, while Consumer Discretionary was off 0.2% to round out the sector losers.

For the week, Real Estate and Utilities rallied 2.6% and 2.4%. Industrials sank 3.3% and Materials were lower by 2%.

Global Economy – European markets were higher across the board despite President Trump’s tweet on the possibility of the U.S. placing a 20% tariff on all of their cars imported to the states.

UK’s FTSE 100 surged 1.7% while France’s CAC 40 soared 1.3%.

The Stoxx 600 Europe rose 1.1% and the Belgium20 was up 1%. Germany’s DAX 30 was higher by 0.5% and

The Eurozone composite flash for June came in at 54.8, versus expectations for a reading of 53.9, with services and manufacturing checking in at 55.

Asian markets were mixed on worries that the tension between U.S. and major trading partners could develop into a big drag on the global economy.

Japan’s Nikkei dropped 0.8% and Australia’s S&P/ASX 200 slipped 0.1%. South Korea’s Kospi advanced 0.8% and China’s Shanghai was up 0.5%.

Hong Kong’s Hang Seng added 0.2%.

Japan’s flash manufacturing PMI for June came in at 53.1, up from 52.8 in May.

The Markit’s flash manufacturing PMI dropped 1.8 points to 54.6 in June, below expectations for a reading of 56.1. The flash services PMI reading of 56.5 matched estimates.

Baker Hughes reported that the U.S. rig count was down 7 rigs from last week to 1,052, with oil rigs down 1 to 862, gas rigs down 6 to 188 and miscellaneous rigs unchanged at 2.

The U.S. Rig Count was up 111 rigs from last year’s count of 941, with oil rigs up 104, gas rigs up 5 and miscellaneous rigs up 2.

The U.S. Offshore Rig Count was down 2 rigs to 18 and down 4 rigs year-over-year.

Market Sentiment – The iShares 20+ Year Treasury Bond ETF (TLT) traded in negative territory for much of Friday’s session with the low reaching $120.06.

Upper support at $120-$119.50 held with a close below this level signaling additional weakness towards $119 and the 50-day moving average.

Near-term resistance remains at $120.50-$121 followed by $121.25 and the 200-day moving average.

The tight trading range over the past 6 sessions is signaling a possible breakout or breakdown once resolved.

RSI recently held support near 50 with a close below this level signaling additional weakness. Near-term resistance is at 60 and the mid-month high.

Market Analysis – The Spiders Dow Jones Industrial Average ETF (DIA) snapped an 8-session skid following the push to $246.51.

Lower resistance at $246-$246.50 and the 50-day moving average held with additional hurdles at $247.50-$248.

Short-term support is at $245-$244.50 with a move below the latter signaling additional weakness towards $242.50-$242.

RSI held early May support at 40 with a close below this level being a continued bearish development.

Resistance is at 45-50 and prior late May support with continued closes above the latter being a bullish development.

The Spider S&P Retail ETF (XRT) fell for the first time in 6 session despite the intraday push to $51.04 and fresh 52-week peak. Fresh resistance at $51-$51.25 remains in play on continued strength.

Support is at $50-$49.75 with a move below the latter likely signaling a short-term top.

Both the 50-day and 200-day moving averages are in solid uptrends.

RSI pulled back with support at 70 holding. A close below this level could led to a continued backtest towards the 65 area and mid-month lows. Resistance is at 75.

The percentage of S&P 500 stocks trading above the 50-day moving average closed Friday at 61.11% and the session low.

Current support is at 60% with a move below 57.5% signaling upcoming weakness.

Resistance is at 65%-70%.

The percentage of Nasdaq 100 stocks trading above the 200-day moving average closed at 62.13%, unchanged, with Friday’s peak reaching 63.10%.

Current resistance is at 65%-67.50% with continued closes above the latter being a continued bullish development. Support is at 60% with a move below this level signaling upcoming weakness for the Nasdaq.

All the best,
Roger Scott.