[MM_Member_Data name=’firstName’],
U.S. markets continued there record run following Wednesday’s breakout with the S&P 500 and the Russell 2000 trading to fresh all-time highs. The Nasdaq came within 5 points of setting another lifetime high while the Dow came within 48 points from its all-time peak.
Some of the giddiness came on the heels of more details from President Trump’s tax plan with a red line for the rate on corporations set at 20%. Financials, along with Technology, were the sector leaders, rising 1.2% and 1%, respectively.
Laggards included Consumer Staples, Utilities and Real Estate.
Global Economy – European markets closed higher across the board following a strong performance from the banks, which typically do better in periods of higher interest rates as they can charge more for their loans. The Belgium20 rallied 0.5% while Germany’s DAX 30, the Stoxx Europe 600, and the UK’s FTSE 100 gained 0.4%. France’s CAC 40 advanced 0.3%.
UK September CBI retailing reported sales jumped to 42, stronger than expectations of 8 and the highest in two years.
Asian markets settled mixed Wednesday ahead of scheduled dividend payments in Japan as the first half of their fiscal year ends this Saturday. Hong Kong’s Hang Seng Index climbed 0.5% and China’s Shanghai index advanced 0.1%. Japan’s Nikkei dipped 0.3% while South Korea’s Kospi and Australia’s S&P/ASX 200 slipped 0.1%.
China August industrial profits rose 24.0% year-over-year, the largest increase in four years.
U.S. MBA Mortgage market index fell 0.5%, along with a 2.8% gain in the purchase index and a 3.5% decline in the refinancing index for the week ending September 22nd.
U.S. durable goods orders rose 1.7% in August, a little better than expected, after falling 6.8% in July. Transportation orders rose 4.9%.
Pending Home Sales declined 2.6% to 106.3 in August after slipping 0.8% in July to 109.1. Expectations were for a decline of 0.2%. It’s the sixth decline this year and is the lowest level since January 2016.
Atlanta Fed’s Q3 GDPNow estimate was trimmed to 2.1% from 2.2% previously following today’s economic news.
Market Sentiment – St Louis Fed James Bullard said there’s no need to raise rates at this point with inflation still lagging. He said the current level of the policy rate is about appropriate while inflation has surprised to the downside this year. He forecasts growth to continue around 2% and that the economy is likely to pick up a little bit in Q4.
Bullard said he’s the most dovish on the FOMC, in his post speech comments and mentioned he used to worry about inflation pressures. He thinks the labor market is about as good as it’s going to get, and suggested equity valuations might be stretched.
Fed dove Kashkari was mum on policy and the economy, which wasn’t really a surprise since he was scheduled to introduce an event on tribal education.
The iShares 20+ Year Treasury Bond ETF (TLT) sank 1.5% after falling to an intraday low of $124.61. Previous support at $124.50 held with a close below $124 signaling further weakness.
Lowered resistance is at $125.50-$126 and the 50-day moving average.
Market Analysis- The PowerShares QQQ (QQQ) made a strong move above resistance at $143.75-$144 and the 50-day moving average following today’s surge to $145.
The aforementioned levels of resistance will try to serve as support on a pullback. Continued closes above $145 gets $146-$146.50 and fresh all-time highs back in play. RSI is back above the 50 level and is in a solid uptrend.
The iShares PHLX Semiconductor (SOXX) surged 2.6% after trading to a high of $156.69. Fresh resistance is at $157-$158 with breakout potential past $160 on continued momentum.
Rising support is at $154.50-$154. RSI is back above the 60 level and appears to be on track to make a run at 70 on continued strength.
All the best,
Roger Scott