[MM_Member_Data name=’firstName’],

U.S. markets traded in another tight range on Tuesday but pulled back into the closing bell on strong geopolitical talk against North Korea. Materials and Real Estate were the weakest S&P sectors while Utilities showed some strength and were the only sector to finish in the green.

The indexes closed on their lows after the Fire and Fury comments from President Trump that could simmer the current rally if world markets react overnight.

Global Economy –Asian markets closed mixed following disappointing trade data from China. The Shanghai index gained 0.1% despite the news while Hong Kong’s Hang Seng Index added 0.6%.

Australia’s S&P/ASX 200 fell 0.9% and Japan’s Nikkei Stock Average pulled back 0.3%. South Korea’s Kospi index dipped 0.2%.

China exports rose 7.2% and imports grew 11% in July, both of which missed expectations. Exports were expected to come in at 10.5% while imports were forecast for a 16.4% gain.

European markets traded higher across the board despite weaker-than-expected trade numbers out of Germany. The DAX 30 led the move higher after posting a gain of 0.3%.

The Stoxx Europe 600 and France’s CAC 40 index advanced 0.2% and the FTSE 100 index and the Belgium20 index rose 0.1%.

Germany’s June trade figures came in light, with exports falling 2.8% and imports sliding 4.5%, versus expectations for both to risen fractionally.

U.S. Economy-The JOLTS report showed job openings surged 461,000 to a record high level of 6.163 million in June.

U.S. IBD/TIPP economic optimism index rose 2.0 points to 52.2 in August, more than recovering the 1.1 point pullback in July.

Redbook Store Sales were up 2.7% on the year for the week ending 8/5.

Market Sentiment –Policy normalization from the Fed remains on track following last week’s solid July jobs report. The Fed is widely expected to announce the start of the balance sheet unwind at next month’s September 19th-20th policy meeting, to begin in October.

Most also expect the FOMC to refrain from further rate hikes at this time after initially saying it might delay tightening when the runoff began.

Analysts believe growth will be good enough by the December 12th-13th FOMC policy meeting for another 25 basis-point rate increase by then although the market is only pricing in roughly a 35%-40% chance.

Much will likely depend on the inflation data between now and year end.

The iShares 20+ Year Treasury Bond ETF (TLT) traded lower throughout the session with the low reaching $124.15. Support at $124.50 and the 50-day moving average was breached with backup help at $124-$123.50 now in play. Lowered resistance is at $124.75-$125.

 

Market Analysis-The Spider S&P 500 ETF (SPY) has traded between $246-$248 since mid-July and was showing signs of a breakout to the upside before the late day volatility.

The record run to $248.91 cleared the previous all-time high of $248 with continued closes above the latter getting $250-$252.50 in play. However, the fade to $246.83 keeps support at $246.50-$246 and the bottom of the trading range in play.

A move below $245.50 could be signs of a possible breakdown.

 

The Technology (XLK) has been stair-stepping higher following the late July pullback and reversal off the record high of $58.20. The bottom reached $56.79 before a close at $57.50 eight trading sessions ago.

This level is short-term support with a move below $57-$56.50 and the 50-day moving average a bearish signal. Resistance is at $58-$58.25 with breakout potential to the low $60’s on continued closes above this level.

Today’s intraday peak of $58.33 was a fresh all-time high.

 

All The best,
Roger Scott