U.S. markets closed mixed to start the week with the Dow holding its 50-day moving average on a late day rebound to close in positive territory. The S&P 500 edged higher but failed in its effort to recover its 50-day MA after falling below this level last Thursday.

The Nasdaq also fell below its 50-day MA late last week while the Russell 2000 tumbled below its 200-day MA. Both indexes remained there after finishing slightly lower. Sectors that caught bids included Real Estate, Health Care, Consumer Staples, Materials, and Utilities. The weakest sectors were Energy and the Financials.

Global Economy –European markets traded lower across the board despite encouraging comments out of Germany. The DAX 30 fell 0.8% while the Belgium20 declined 0.6%. France’s CAC 40 index dropped 0.5% and the Stoxx Europe 600 gave back 0.4%. The FTSE 100 slipped 0.1%.

Germany’s Central Bank said the strong economic upturn in the economy is expected to continue in the third quarter, with industrial output probably continuing to play an important role, helped by a substantial expansion in exports.

Asian markets were mixed after the U.S. and South Korea kicked off annual military exercises over the weekend. North Korea warned on Sunday that the exercises are reckless behavior driving the situation into the uncontrollable phase of a nuclear war.

Japan’s Nikkei stumbled 0.4% and Australia’s S&P/ASX 200 tumbled 0.4%. South Korea’s Kospi index dipped 0.1%. China’s Shanghai index gained 0.6% and Hong Kong’s Hang Seng Index advanced 0.4%.

U.S. Economy-The Chicago Fed National Activity index fell to -0.01 in July after checking in at 0.16 for June.

Market Sentiment –The Fed’s inaugural SCE Labor Market Survey was released today. Regarding consumer experiences, the July 2017 SCE Labor Market Survey shows an increase in the proportion of individuals who searched for a job, and a decline in the average full-time offer wage. Satisfaction reported by workers with promotion opportunities at their current jobs also declined.

Turning to expectations, job transition expectations of those currently employed were unchanged. However, expectations regarding receiving job offers and the amount of average expected offer (conditional on receiving one) both declined.

The average reservation wage, the lowest wage respondents would be willing to accept for a new job, declined to its lowest level since March 2015. The Fed introduced this survey as a standalone model as part of the broader Survey of Consumer Expectations (SCE) series.

The iShares 20+ Year Treasury Bond ETF (TLT) tested a morning low of $126.50 with upper support at $126.25-$126 easily holding.

The run to $127.02 cleared lower resistance at $127-$127.50 but failed to hold by just seven cents. A close above the latter could lead to a breakout towards $128-$130.


Market Analysis-The Spiders Dow Jones Industrial Average ETF (DIA) continued to work its way back towards support at $216-$215.50 and the 50-day moving average with today’s low tapping $215.73.

A close below the latter could lead to additional weakness to $214 and early July levels. Near-term resistance at $216.75-$217 was tested into the closing bell following the pullback off the $220 level. Continued closes above the latter would be a slightly bullish development.


The Financial Select Sector Spiders (XLF) was weak for much of the session after a penny pop to $24.63 on the open. Resistance at $24.75 and the 50-day moving average held firm following last Thursday’s close below these levels.

Current support is at $24.25-$24 with the 100-day moving average sandwiched in between.


All the best,
Roger Scott