U.S. markets traded mixed throughout Thursday’s session with Tech weighing on momentum.
Economic news had little effect on the market as Wall Street remained focused on earnings following the peak day and week of the 2Q season.
The divergence between the major indexes held key support and resistance levels with the small-caps showing the most strength. Volatility remained tamed with the recent trading range still indicating higher highs for the market.
The Russell 2000 rose 0.6% following an intraday push just south of 1,703.
The index failed to hold the 1,700 level and has been trapped in a trading range between 1,680-1,700 that has lasted throughout much of July.
The Dow advanced 0.4% after holding positive territory throughout the session while reaching a peak of 25,587.
March and June resistance at 25,400 was cleared with continued closes above this “double top” level being a bullish development.
The S&P 500 fell 0.3% after trading in negative territory throughout the day while bottoming at 2,835.
Fresh support at 2,835-2,830 held with a move below 2,825 signaling a possible short-term top.
The Nasdaq sank 1% after opening below the 7,900 level while tapping an intraday low of 7,834. Fresh support at 7,825-7,800 held with a move below the latter also suggesting a short-term peak for the index.
Utilities and Energy led sector strength after rising 1.1%. Industrials added 0.8%.
Communications Services were whacked for 3.8% and easily led sector laggards. Technology tanked 1.5%.
Global Economy – European markets were higher across the board following the trade truce with the U.S., though the Trump administration will continue to keep the pressure on until they reach a formal agreement.
Germany’s DAX 30 soared 1.8% and France’s CAC 40 jumped 1%. The Stoxx 600 Europe rallied 0.9% and the Belgium20 rose 0.3%. UK’s FTSE 100 was up 0.1%.
German August GfK consumer confidence dipped 0.1 to 10.6, weaker than expectations of no change at 10.7.
Asian markets settled mostly lower as uncertainty over the U.S. trade dispute and its impact on Chinese fiscal policy persists.
China’s Shanghai fell 0.7% and Hong Kong’s Hang Seng declined 0.5%.
Australia’s S&P/ASX 200 and Japan’s Nikkei slipped 0.1%. South Korea’s Kospi gained 0.7%
Japan June PPI services rose 1.2%, topping forecasts of 1%.
Initial Jobless Claims rose 9,000 to 217,000 for the week ending July 21st The 4-week moving average fell to 218,000 from 220,750. Continuing claims declined 8,000 to 1,745,000 in the July 14th week.
Durable Goods Orders rebounded 1% in June following the 0.3% decline in May and the 1% drop in April, breaking 2 months of declines. Transportation orders bounced 2.2% from -1.4%.
Excluding transportation, orders were up 0.4% versus 0.3%. Non-defense capital goods orders ex-aircraft increased 0.6% from 0.7%.
Shipments surged 1.7% from 0.2%, and were 1% higher for the non-defense capital goods orders ex-aircraft component, from 0.2%. Inventories dipped 0.1% from 0.3%. The inventory-shipment ratio slipped to 1.60 from 1.63.
International Trade in Goods deficit widened to $68.3 billion in June from $64.8 billion in May. Goods exports fell 1.5% to $141.9 billion while imports increased 0.6% to $210.3 billion.
Meanwhile, June Advance wholesale inventories were unchanged at $632.5 billion. Retailer inventories were also flat at $635.5 billion.
The Kansas City Fed Manufacturing Index Level checked in at 23 for July.
Atlanta Fed’s Q2 GDPNow estimate was cut to 3.8% down from 4.5% previously and now roughly in line with the Blue Chip consensus.
Market Sentiment – The iShares 20+ Year Treasury Bond ETF (TLT) is trying to form a base after falling for the 7th time in 9 sessions. Thursday’s low tapped $119.16 with support at $119.25-$119 holding over the past 4 sessions.
A close below $119 would be a continued bearish development.
Resistance remains at $119.75-$120 and the 50-day moving average with additional hurdles at $120.50-$120.75 and the 200-day moving average.
Market Analysis – The Spider Small-Cap 600 ETF (SLY) have been in a trading range between $74-$75 throughout July. Thursday’s peak reached $75.49 with upper resistance at $75.25-$75.50 holding.
The recent all-time high is at $75.55. Continued closes above $75.50 would be a bullish development for a run towards $77-$77.50.
Support is at $74.50-$74.25 with a close below $74 likely leading to additional weakness.
RSI is back in a slight uptrend after clearing lower resistance at 60-65.
A close above the latter would signal additional strength and a possible run towards 70-75 and June highs. Support is at 55-50.
The Real Estate Select Sector Spider (XLRE) was up for the 2nd-straight session after trading to a high of $32.90.
Lower resistance at $32.75-$33 held with continued closes above the latter being a more bullish development.
Rising support is at $32.50-$32.25. The 50-day moving average has been in a solid uptrend since late May and cleared the 200-day moving average earlier this month to form a golden cross. T
his is typically a bullish technical signal for higher highs.
RSI is trying to clear and hold resistance at 60 with continued closes above this level signaling additional strength.
Support is at 50 with a close below this level being a warning sign for lower lows.
All the best,