U.S. markets continue to show strong momentum with the Dow, S&P 500 and Nasdaq closing at record highs and the blue-chips on an 8-session win streak. The Russell 2000 lagged by less than a point after spending much of the session underwater while trading in a 4-point range.

The Financials continued its recent surge with XLF closing in on a 52-week high ahead of the FOMC minutes on Wednesday. Real Estate and Healthcare led the laggards after falling 1% and 0.8%, respectively.

Global Economy – European markets showed strength after German investor confidence rose for the first time in 4 months. UK’s FTSE 100 gained 0.3% while France’s CAC 40 gained 0.2%. The Belgium20 was higher by 0.1%. The Stoxx Europe 600 and Germany’s DAX 30 were up less than a point, or 0.04%, and 0.02%, respectively.

The German September ZEW survey expectations of economic growth rose 7 to 17, stronger than expectations of adding 2 ticks.

Asian markets traded mostly lower aside from Japan’s Nikkei which jumped 2% while closing back above the 20,000 level. Hong Kong’s Hang Seng Index fell 0.4% and China’s Shanghai index declined 0.2%. South Korea’s Kospi slipped 0.1% and Australia’s S&P/ASX 200 was unchanged.

The current U.S. account deficit widened unexpectedly to $123.1 billion in Q2 from a revised $113.5 billion in Q1.

Import and export prices both rose 0.6% month-over-month in August, topping expectations.

Housing starts dipped 0.8% to a 1.180 million rate in August. Building permits increased 5.7% to a 1.3 million rate.

Market Sentiment – The iShares 20+ Year Treasury Bond ETF (TLT) traded slightly higher on the open after reaching a peak $126.31. Lower resistance at $126.50-$127 held before the late day fade to $125.73.

Support at $125.50 and the 50-day moving average held with a close below these levels being a bearish development. 

 

Market Analysis- The Russell 2000 ETF (IWM) is trying to breakout above resistance and $144 with today’s high tapping $143.69.

Continued closes above this level should lead to a near-term run towards $145-$146 and fresh all-time highs. Rising support is at $143-$142.50.

 

The Real Estate Select Sector Spider (XLRE) is trying to hold support at $32.50-$32.40 and the 50-day moving average. Today’s low reached $32.44 with risk to $32.20-$32 on a close below the latter.

Resistance is at $32.60-$32.80. RSI has been in a slight downtrend and is trying to find support near the 40 area on continued weakness.

 

All the best,
Roger Scott