[MM_Member_Data name=’firstName’],

U.S. markets began the session higher, with the Dow continuing its run at all-time highs and surpassing 22,000 for the first time.

The Nasdaq and S&P 500 show slight gains on the open, as well, thanks to Apple’s (AAPL) earnings results and surge to record highs.

However, as the stock backed of its gains, Tech and the broader market moved into the red while making a backtest to support. The small-caps were the weakest link as they fell 1.1% after trading in negative territory throughout the session while closing below the 50-day moving average for the first time since late May.


Global Economy –European markets were lower as Banking and Healthcare stocks lagged with Energy and Industrial sectors showing some strength. The FTSE 100 index slipped 0.1% while the Stoxx Europe 600 gave back 0.4%. France’s CAC 40 index fell 0.4% and Germany’s DAX 30 sank 0.6%.

Eurozone PPI for June was inline with expectations with a month-over-month decline of 0.1%.

2Q Gross Domestic Product in the eurozone came in at 0.6% growth quarter-over-quarter and at 2.1% year-over-year. This topped expectations for a reading of 0.5% growth.

Asian markets traded mixed with a number of Apple’s suppliers benefitting from yesterday’s earnings after the close. Japan’s Nikkei Stock Average jumped 0.5% to reclaim the 20,000 level.

Hong Kong’s Hang Seng Index added 0.3% while South Korea’s Kospi index was up 0.2%. China’s Shanghai index declined 0.2% and Australia’s S&P/ASX 200 dropped 0.5%.

U.S. Economy-The MBA mortgage market index sank 2.8% following a 2.0% drop in the purchase index and a 3.8% decline in the refinancing index for the week ending July 28th. The average 30-year fixed mortgage rate remained unchanged at 4.17%.

ADP reported private payrolls increased 178,000 in July, and below the 190,000 forecast.

July Gallup U.S. Job Creation Index level came in at +37.

Market Sentiment –Federal Reserve Bank of Cleveland president Loretta Mester said inflation’s recent softness had convinced her to lower her estimate for the level at which unemployment begins to promote faster price increases, to 4.75% from 5%.

She went on to say she wanted to wait for additional inflation data before making a decision on an interest-rate hike when the FOMC meets September 19-20.

San Francisco Federal Reserve Bank President John Williams said the U.S. economy has fully recovered from the financial crisis and as a result the U.S. central bank should start to shrink its massive $4.5 trillion balance sheet this fall.

He added the Fed will start the process nice and easy and that it would take about four years to get the balance sheet down to a reasonable size. He also wouldn’t say what the exact number would be but that be it will be quite a bit lower than today.

Elsewhere, Fed’s James Bullard said he’s concerned over soft inflation, and added he does not support further rate hikes at this point. Bullard is not a voter this year and this is not a new position for him.

The market has already priced out any further rate action as soon as the next FOMC meeting in September with Fed funds futures reflecting a little less than 40% risk for another rate increase by the end of the year.

The iShares 20+ Year Treasury Bond ETF (TLT) continued to work its way higher after testing an intraday peak of $125.17. Fresh resistance is at $125.50-$125.75 with a close above $126 a continued bullish development. Rising support is at $124.50-$124 and the 50-day moving average.



Market Analysis-The Spider S&P 500 ETF (SPY) has traded in a tight range of $246-$248 since mid-July and failed upper resistance at $247.75-$248 on the high of $247.60 today.

Continued closes above the latter would be bullish for a possible run towards $249.50-$250. The backtest to $246.37 held support at $246.25-$246. A move below the latter could lead to further weakness to $244-$243.50 and the 50-day moving average. The longer the trading range, the bigger the breakout, or breakdown, will be.


The Spider S&P 500 Semiconductor ETF (XSD) sank 3.5% to test support at $63.25-$63 with the low reaching $63.17. The close back below the 50-day moving average was a bearish development with risk to $62 and the 100-day moving average on continued weakness. Near-term resistance is at $64-$64.25.


The June pullback in the semiconductors should be a reminder and a possible early clue there could be continued weakness in Tech over the next month or so.

All the best,
Roger Scott