U.S. markets closed mostly higher on Thursday despite President Trump’s comments regarding Canada and the NAFTA impasse, while also accusing China on election meddling.
The latest news kept strained trade relations at the forefront with near-term resistance levels holding for the major indexes.
Tech led the rebound while the small-caps slacked for the 2nd-straight session.
Volatility stayed within a tight range and is giving a neutral reading heading into the last trading day of September and for the third-quarter.
The Nasdaq rallied 0.7% following the midday push to 8,071. Lower resistance at 8,075-8,100 held with a move above the latter getting fresh all-time highs in play.
The S&P 500 rose 0.3% after trading to a high of 2,927. Resistance at 2,920-2,925 held for the 4th-straight session with continued closes above the latter being a bullish signal.
The Dow added 0.2% after trading to an intraday high of 26,557.
Resistance at 26,600 held for the the 3rd-straight session with a close above this level being a bullish signal for higher highs.
The Russell 2000 slipped a point, or 0.1% following the pullback to 1,689.
Near-term and upper support at 1,685-1,680 held with a move below the latter being a continued bearish development.
Utilities and Communication Services led sector strength after rising 1% and 0.9%, respectively.
Materials was the weakest sector after falling 0.9%. Financials and Consumer Staples were lower by 0.4% and 0.1%, respectively.
Global Economy –European markets were mostly higher for a 2nd-straight session despite reports that Italy’s Five Star Movement and the League were pushing for extra spending that may delay Italy’s 2019 budget proposal.
UK’s FTSE 100 and France’s CAC 40 were higher by 0.5%. Germany’s DAX 30 and the Stoxx 600 Europe advanced 0.4%. The Belgium20 dipped 0.1%.
Eurozone September economic sentiment fell 0.7 to 110.9, missing forecasts for a print of 111.2.
The September business climate indicator was unchanged at 1.21, stronger than expectations of a pullback to 1.19.
Eurozone August M3 money supply rose 3.5% year-over-year, weaker than estimates of 3.9%.
German October GfK consumer confidence climbed 0.1 to 10.6, stronger than expectations for no change at 10.5.
The top five German research institutes cut their German 2018 GDP forecast to 1.7% from a prior view of 2.2%.
Asian markets settled mostly lower following slightly disappointing economic news out of China.
Japan’s Nikkei sank 1% while China’s Shanghai fell 0.5%.
Hong Kong’s Hang Seng declined 0.4% and Australia’s S&P/ASX 200 slipped 0.2%. South Korea’s Kospi gained 0.6%
China August industrial profits rose 9.2% year-over-year but was the smallest increase in 5 months.
Jobless Claims rose 13,000 to 214,000 and below expectations for a print of 215,000.
August International Trade in Goods Balance had a deficit of $75.8 billion versus forecasts of -$70.8 billion.
Atlanta Fed’s Q3 GDPNow estimate was cut to 3.8% down from 4.4% the prior week.
The Kansas City Fed Manufacturing Index Level for September came in at 13.
Q2 GDP growth was unrevised at 4.2%.
Durable goods orders bounced 4.5% in August after dropping 1.2% in July.
Pending home sales dropped 1.8% to 104.2 in August. Regionally, sales dropped in the West (-5.9%), in the Midwest (-0.5%), the Northeast (-1.3%), and in the South (-0.7%).
Market Sentiment – The iShares 20+ Year Treasury Bond ETF (TLT) closed higher for the 2nd-straight session after reaching a peak of $117.65.
Lower resistance at $117.50-$118 was cleared with a close above the latter being a more bullish development.
Support remains at $117-$116.50 with a move below $116.25 being a bearish development.
Market Analysis – The Spider S&P 500 ETF (SPY) snapped a 4-session slide after tapping an intraday high of $291.91.
Near-term resistance at $291.50-$292 held. A close above $292 could lead to a run towards $294-$295 over the near-term with last week’s all-time high at $293.94.
Near-term support is at $290-$289.50.
A move below the latter would be a slightly bearish development with risk towards $287.50-$285 and the 50-day moving average.
RSI cleared lower resistance at 60-65 with continued closes above the latter leading towards the 70 level.
Support is at 55 with a move below 50 being a bearish development and signaling a short-term top.
The Spider S&P Retail ETF (XRT) fell for the 4th time in 5 sessions After tapping an intraday low of $51.13.
Support at $51-$50.75 and the 50-day moving average held with a move below the latter being a slightly bearish development.
Resistance is at $51.75-$52 with the mid-August all-time high at $52.96.
A longer-term trading range between $50.75-$52.25 has been in play since with continued closes back above the latter being a bullish signal.
RSI is trying to clear and hold lower resistance at 50-55.
A move above the latter would be a more bullish development for continued strength. Support is at 45 with a close below this level being a bearish development.
All the best,
Roger Scott.