U.S. markets were mixed on Wednesday as strength in the blue-chips outweighed the weakness in Tech and the small-caps.

January resistance levels remains in play for the Dow while near-term and fresh support levels held for the other major indexes.

Economic news was better-than-expected and volatility slipped to its lowest levels in 4 weeks.

The action is still suggesting higher highs over the near-term and ahead of 3Q earnings season that starts in early October.

The Dow jumped 0.6% after reaching an intraday peak of 26,464.

Lower and fresh support at 26,400-26,600 held with the all-time high at 26,616.

The S&P 500 gained 0.1% following the intraday push to 2,912. New resistance at 2,925-2,950 remains in play on a close above the all-time high at 2,916.

The Nasdaq slipped 0.1% after testing an intraday low of 7,917.

Upper support at 7,900-7,875 and the 50-day moving average easily held with a close below the latter being a warning signal.

The Russell 2000 slipped 0.5% following the backtest to 1,700 and the 50-day moving average.

Upper support at 1,700-1,690 held with a close below the latter being a bearish development.

Financials zoomed 1.7% to led sector strength while Materials surged 1.1%.

Utilities tanked 2.2% and easily led sector laggards while Real Estate fell 1%.

Global Economy – European markets closed higher across the board despite chatter that Prime Minister Theresa May was going to reject a new offer by the European Union to solve the Irish border issue.

France’s CAC 40 was higher by 0.6% and Germany’s DAX 30 added 0.5%.

UK’s FTSE 100 was up 0.4% and the Stoxx 600 Europe rose 0.3%. The Belgium20 climbed a point, or 0.03%.

UK August CPI rose 0.7% month-over-month and 2.7% year-over-year, stronger than expectations of 0.5% and 2.4%. August core CPI rose 2.1% year-over-year, topping forecasts of 1.8%.

Eurozone August new car registrations jumped 31.2% year-over-year to 1.134 million, the largest increase since the data series began in 2004.

Asian markets showed continued strength as Japan’s leading index got a boost from added gains for dollar-yen and bond yields while China’s markets shrugged off new tariffs.

Hong Kong’s Hang Seng advanced 1.2% while China’s Shanghai and Japan’s Nikkei rallied 1.1%.

Australia’s S&P/ASX 200 advanced 0.5%. South Korea’s Kospi slipped a half-point, or 0.03%.

The Japan August trade balance was in deficit by -444.6 billion yen, narrower than expectations of -483.2 billion yen. August exports rose 6.6% year-over-year, stronger than forecasts of 5.2%.

August imports rose 15.4% year-over-year, topping estimates of 14.5%.

The BOJ kept its benchmark target interest rate at -0.1% and its 10-year yield target at 0%.

BOJ Governor Kuroda said the BOJ won’t quit easing before inflation reaches the BOJ’s 2% target.

MBA Mortgage Applications rose 1.6%, in addition to a 0.3% increase in the purchase index and a 3.7% gain in the refinancing index for the week ending September 14th.

The 30-year mortgage rate rose 4 basis points to 4.88% to mark the highest level since April 2011.

Housing Starts rose 9.2% to 1.282 million in August, topping expectations for a print of 1.24 million. Housing Starts are now 9.4% higher on a year-over-year basis versus -0.9% in July.

Building permits dove 5.7% to 1.229 million from a revised 0.9% gain to 1.303 million and below expectations of 1.32 million.

Current Account deficit narrowed to -$101.5 billion after widening to -$121.7 B in Q1, and better-than-expectations of -$104 billion. The balance on goods and services was -$133.8 billion versus -$154 billion.

The balance on goods was -$203.2 billion from -$220.8 billion.

The services surplus was $69.3 billion from $66.8 billion.

The primary income balance dipped to $60.8 billion from $61.2 billion while the secondary income balance was little changed at -$28.5 billion deficit versus -$28.9 billion.

Atlanta Fed’s Q3 GDPNow estimate was unchanged at 4.4%.

Market Sentiment – The iShares 20+ Year Treasury Bond ETF (TLT) was down for the 3rd-time in 4 sessions after tanking to a $116.19 shortly after the open.

May support at $116.25-$115.75 held with a move below the latter getting $115 and fresh 52-week lows in play.

Lowered resistance at $117-$117.50.

Market Analysis – The Spider S&P 500 ETF (SPY) closed higher for a 5th time in 6 sessions after reaching a peak of $291.69. Near-term resistance at $291.50-$292 held with the late August all-time high at $291.74.

A close above $292 could lead to a run towards $294-$295 over the near-term.

Rising support is at $290-$289.50. A move below $288.50 would be a slightly bearish development with risk towards $287.50-$285.

RSI is pushing resistance at 65 with continued closes above the latter leading towards 70-75 and August peak levels.

Support is at 60 with a move below 55 being a bearish development and signaling another short-term top.

The Consumer Staples Select Spiders (XLP) has traded in a tight range between $54.50-$55 over the past 5 sessions.

Wednesday’s peak reached $54.91 with a close above $55 getting December resistance at $55.50-$56 in play.

A close below $54.50 would be a slightly bearish signal for a continued retest towards $54-$53.75 and the 50-day moving average.

A golden cross formed in late August with the 50-day moving average clearing 200-day moving average to form a golden cross.

This is typically a bullish technical pattern for higher highs.

RSI has been in slight downtrend with support at 55.

A close below this level will likely signaling additional weakness with risk to 50 and the August lows. Resistance is at 60.

All the best,
Roger Scott.