[MM_Member_Data name=’firstName’],

The U.S. market opened sharply higher and traded in positive territory throughout Wednesday as testimony from Janet Yellen to the House Finance Committee dominated headlines. The Dow tapped a fresh all-time intraday and closing high with the other major indexes pushing prior record resistance levels on today’s gains.

Global Economy – European markets were higher and were led by the France’s CAC 40 rose on its 1.6% rise. Both the Euro Stoxx 50 and the German DAX climbed 1.4%. Most of the gains were attributed to Eurozone May industrial production which rose +1.3% month-over-month and represent the largest increase in 6 months.

The Europe rally was also supported by comments from the ECB’s Visco who said expansionary policy is still needed.

Asian markets were mostly lower, as Japan’s Nikkei 225 fell 0.5%, China’s CSI 300 declined 0.3% but Hong Kong’s Hang Seng was up 0.6%.   

The UK unemployment rate unexpectedly fell to a 43-year low of 4.5%.

Chinese stocks retreated as the yuan rose to a 1-week high against the dollar. The China June new yuan loans rose by +1.54 trillion yuan, the biggest increase in five months, which reduces the chances of additional government stimulus. Expectations were +1.50 trillion yuan.

U.S. Economy- U.S. MBA reported mortgage applications dropped 7.4% in the week ending July 7th, following a 1.4% increase previously, and is down 36% year-over-year.

EIA inventory data showed a 7.6 million barrel fall in crude inventory, versus the consensus forecast for a 3 million barrel decrease.

The Atlanta Fed Business Inflation Expectations Business data was up 1.7% for the year.

The Treasury’s $20 billion 10-year priced at expectations. The note stopped at 2.325%, and slightly below the 2.322% at the bid deadline. The award rate was 2.195% at the June auction.

The Fed Beige Book revealed overall economic activity expanded across all twelve Federal Reserve Districts in June, with the pace of growth ranging from slight to moderate.

As far as Employment and Wages, employment maintained a modest to moderate pace of expansion, with Atlanta and St. Louis experiencing flat employment levels. Labor markets tightened further for both low and high-skilled positions, particularly in the construction and IT sectors. Wages continued to grow at a modest to moderate pace with companies attributing the wage gains to tighter labor market conditions.

Market Sentiment – Janet Yellen stated the central bank should begin paring its balance sheet in the near-term and that she and the central bank continue to expect gradual increases in the federal funds rate over time. The Fed Chair also added they were not looking to adjust the 2% inflation target.

The iShares 20+ Year Treasury Bond ETF (TLT) cleared the $124 level after peaking at $124.04 intraday while closing above the 50-day moving average. Continued closes above $125 will likely lead to another run at $127-$128 and where a possible double-top could occur. This area also represents the November gap lower and major resistance levels going forward. Fresh support is at $123.25-$123.




Market Analysis- The small-caps are facing a crucial area of resistance with the Russell 2000 coming within two points of its all-time high of 1,433. The index closed at near upper resistance at 1,420-1,425 with continued closes above 1,430-1,435 likely leading to 1,440-1,450.

The iShares Russell 2000 ETF (IWM) tested a a high of $142.22 intraday and came within shouting distance of its lifetime high of $142.90 that triggered on June 9th. You can see the “triple-top” at the $142 level over the past month and these setups can be bullish, but also bearish. Continued closes above $143 could lead to a short-term run towards $145-$146. Crucial support going forward is currently at the $140 level with a close below $139-$138.75 and the 50-day moving average signaling a possible near-term top.



The Airlines stocks rallied to fresh highs while helping the Dow Jones Transports Average ($TRAN) continue its push towards record resistance and closes above the 9,700 level. 



The US Global Jets ETF (JETS) traded to a lifetime high of $32.76 today and is the purest play as far as airline ETF’s. The chart looks extremely bullish with all of the major moving averages in strong uptrends. Blue-sky territory on continued momentum could carry shares towards $33-$35. Near-term support is at $32.25-$32 with a close below the latter signaling a possible near-term top.



JETS is a relatively new ETF that has only been trading for a little over two years. The ETF is comprised primarily of domestic airline companies and include aircraft manufacturers, terminal services companies and airports. A little over 20% of the ETF has exposure to international companies and stocks.

Existing / New Position Update

SYMC is making headways and moving back to being at the money. I know many of you “wrote this trade off” but it’s breaking through upper resistance level and is showing good strength at this time.

MAR remains neutral and the only reason why I’m still holding the position is because the long term view is so strong, which increases odds that institutional activity will come along sooner than later.

AAPL has good amount of time left and earnings should cause upside over the near term.

I’m waiting to liquidate before intiating new position but if strong stock moves into or minimum threshold territory, I w will take advantage and add another position to the mix.

Roger Scott