[MM_Member_Data name=’firstName’],
Market Action-U.S. markets traded higher for the second-straight session to push resistance that served as prior support. The small-caps showed the most strength but the Russell 2000 fell just shy of recovery its 100-day moving average.
Tech soared past its 50-day moving average to recover last Thursday’s losses while regaining early July support levels.
Global Economy –European markets traded higher across the board as top U.S. officials over the weekend sought to downplay the risks of a military conflict with North Korea.
The DAX 30 paced the rebound after posting a gain of 1.3% to recover the 12,000 level. France’s CAC 40 index jumped 1.2% while the Belgium20 and the Stoxx Europe 600 added 1.1%. The FTSE 100 advanced 0.6%.
Asian markets were mostly higher despite mixed economic news out of Japan and China. Hong Kong’s Hang Seng Index zoomed 1.4% and China’s Shanghai index soared 0.9%.
South Korea’s Kospi index gained 0.6% while Australia’s S&P/ASX 200 climbed 0.7%. Japan’s Nikkei Stock Average fell 1%.
China’s industrial output rose 6.4% in July versus a forecast of 7% growth.
China’s retail sales came in at 10.4% in July and below the forecast for a 10.9% rise.
Japan’s economy grew at an annualized growth of 4.0% in the April-June quarter and was faster than the 2.5% growth expected.
U.S. Economy-The Treasury announced a $35 billion 4-week bill sale for Tuesday, a $10 billion cut from the $45 billion amount that was in place for the last four auctions.
Market Sentiment –New York Fed President William Dudley said he is in favor of continuing to slowly raise short-term interest rates even with inflation below the central bank’s 2% target. He listed two reasons to continue to raise short-term rates, saying financial conditions have eased even though the Fed has been tightening and the current level of short term rates is pretty low.
The Fed’s July survey of consumer expectations showed steady views on prices, while expectations on household income growth hit a series high. The median inflation index was unchanged at 2.5% for the 1-year time horizon, but slipped slightly in the 3-month time frame to 2.7% from 2.8%.
Median 1-year home price change expectations declined for a third month, while expectations on gas price changes for the 1-year ahead declined for a third month as well.
Median 1-year expected earnings edged up 0.1% to 2.6% while median expected household income growth increased 0.3% to 3%.
The iShares 20+ Year Treasury Bond ETF (TLT) traded in a tight range after opening in the red and testing to a low of $125.73. Support at $126-$125.50 was split with additional help at $124.75 and the 50-day moving average on a move below the latter. Resistance remains at $126.50-$127.
Market Analysis-The Spider S&P 500 ETF (SPY) made a strong recovery above the $246 level while clearing its 50-day moving average in the process. The gains also wiped out last Thursday losses as SPY moved back into a prior trading range between $246-$248.
It is important to note that trading ranges can get stretched but another close below support at $246-$245 would be a bearish development. Resistance is at $247-$248 with continued closes above the latter a bullish development.
The iShares Semiconductor ETF (SOXX) gained 2.6% after testing a high of $148.45 into the closing bell. The close back above the 50-day moving average was a bullish development with resistance at $148.50-$149. A move above $150 could lead to momentum for another possible push towards $152-$154. Support is at $147-$146.50.
The iShares Semiconductor ETF (SOXX) gained 2.6% after testing a high of $148.45 into the closing bell. The close back above the 50-day moving average was a bullish development with resistance at $148.50-$149.
A move above $150 could lead to momentum for another possible push towards $152-$154. Support is at $147-$146.50.
All the best,
Roger Scott