U.S. markets opened higher but struggled to extend the rally from the past two days as the major indexes finished mixed. The Retail sector was punished following a number of disappointing earnings that stalled overall momentum.
Small-caps were the weakest link and continued to struggle with resistance while the broader market held key support levels following narrow trading ranges.
Global Economy –European markets rebounded for the second-straight session despite weaker-than-expected economic data out of Germany. The Belgium20 advanced 0.6% while France’s CAC 40 index and the FTSE 100 were up 0.4%. The DAX 30 and the Stoxx Europe 600 gained 0.1%.
Consumer Price Inflation for the U.K growth remained unchanged at 2.6% in July, versus expectations for an increase to 2.7%.
German Q2 GDP rose 0.6% for the quarter, weaker than expectations of 0.7%.
Asian markets were mostly higher as fears of an attack on Guam and a nuclear war between the U.S. and North Korea continue to recede. Japan’s Nikkei Stock Average surged 1.1% while South Korea’s Kospi index jumped 0.6%.
Australia’s S&P/ASX 200 added 0.4% and China’s Shanghai index climbed 0.4%. Hong Kong’s Hang Seng Index dipped 0.3%.
U.S. Economy-U.S. retail sales of 0.6% for July topped estimates for a rise of 0.4%.
U.S. import prices rose 0.1% with export prices up 0.4% in July.
The U.S. NAHB homebuilder sentiment index rose 4 points to 68 in August after falling 2 points to 64 in July. This is the best reading since May.
U.S. business inventories rose 0.5% in June, with sales up 0.3%, matching forecasts.
U.S. Empire State manufacturing index surged 15.4 points to 25.2 in August, topping expectations for a print of 9.8. The employment component checked in at 6.2 from 3.9, while the workweek surged to 10.9 from unchanged. New orders climbed to 20.6 from 13.3. Prices paid rose to 31 from 21.3.
Prices received were 6.2 from 11. The 6-month outlook rose to 45.2 from 34.9, with employment at 9.3 from 11.8. Capital expenditures were 11.6, up from 15.
Market Sentiment –The iShares 20+ Year Treasury Bond ETF (TLT) traded in negative territory throughout the day with the low reaching $124.52. Support at $125-$124.50 and the 50-day moving average held with a move below $124 being a bearish development.
Lowered resistance is at $125.50-$126.
Market Analysis-The Russell 2000 ETF (IWM) has been struggling with its 100-day moving average for the past couple of session with the morning high reaching $138.96. Resistance at $138.50-$139 held with additional hurdles at $140-$140.50 and the 50-day moving average.
Support is at $137.25-$137 with another move below the latter leading to a further backtest to $136-$135.50 and the 200-day moving average.
The Spider S&P Retail ETF (XRT) is trading near its recent 52-week low of $38.53 following today’s 2.x pullback and low of $38.65. A move below $38.50 will likely get multi-year support at $38-$37.50 in play.
The major-moving averages are still in a downtrend with fresh resistance at $39-$39.50. The 5-day pullback off the $41.50 level erased a month of gains from early July.
All the best,