U.S. markets were choppy throughout Tuesday’s session while trading in a tight range as the start of the FOMC meeting got underway.
The upside momentum faded as President Trump addressed the UN General Assembly ahead of Wall Street’s lunch break.
The major indexes held near-term support before reversing course and eventually settling mixed for the session.
Volatility also stayed in a relatively tight range while holding both key support and resistance levels.
The Russell 2000 held positive territory throughout the session while adding 0.2% and testing a high of 1,712.
Resistance at 1,720-1,725 easily held with a close above the latter getting 1,740-1,750 and lifetime highs back in the mix.
The Nasdaq was also higher by 0.2% following the intraday run to 8,014.
Resistance at 8,000 was cleared and held with continued closes above this level being a slightly bullish development.
The Dow dipped 0.3%% after trading to a low of 26,475. Near-term support at 26,400 held with a close below this level being a continued bearish development.
The S&P 500 slipped 0.1% following the backtest to 2,913. Major support at 2,900 held with a move below this level being a slightly bearish signal.
Energy and Consumer Discretionary paced sector strength after rising 0.6% and 0.4%, respectively. Communication Services advanced 0.04%.
Utilities sank 1.4% to lead sector weakness while Consumer Staples and Materials fell 0.6% and 0.5%, respectively.
Global Economy – European markets rebounded on Tuesday despite oil-producing nations coming under the spotlight after President Trump spoke at the United Nations in New York. The President accused OPEC members of ripping off the world over their sales of oil.
UK’s FTSE 100 rallied 0.7% and the Stoxx 600 Europe rose 0.5%. Germany’s DAX 30 added 0.2% while the Belgium20 and France’s CAC 40 climbed 0.1%.
The German August wholesale price index rose 0.3% month-over-month and 3.8% year-over-year.
Asian markets were mixed in limited trading as the region is largely closed for holidays this week.
There was little reaction to the U.S.-Korea Free Trade Agreement as trade officials were directed to move forward with additional steps to bring the updated agreement into force as soon as practicable.
Japan’s Nikkei added 0.3% and Australia’s S&P/ASX 200 edged up 0.1%.
China’s Shanghai was down 0.6%. South Korea’s Kospi and Hong Kong’s Hang Seng were closed for holidays.
Japan August PPI services prices rose 1.3% year-over-year, topping expectations of 1.1%.
Redbook Store Sales were up 5.8% for the year in the week ending September 22nd.
July S&P Corelogic Case-Shiller was up 0.1%, below forecasts for a rise 0.5% to 214.3. The 12-month pace slowed for a fourth straight month to 5.92% year-over-year from 6.36%.
The 10-City index rose 0.24% to 227.05 after the prior 0.51% increase to 226.51.
The annual pace slipped to 5.48% year-over-year from 6.02%. All 20 cities recorded annual gains, paced by Las Vegas (13.68%), Seattle (12.05%) and San Francisco (10.8%).
July FHFA House Price Index rose 0.1%, missing expectations for a gain 0.3% to 264.7.
Four of the 9 region posted gains, led by the South Atlantic (1.1%) and the Pacific (0.2%), while four regions declined, paced by East South Central (-0.5%), with the West North Central unchanged.
The 12-month changes were all positive, ranging from 4.7% in the New England division to 8.7% in the Mountain division.
Consumer Confidence rose 3.7 points to 138.4 in September, another unexpected gain after the surprising 6.8 point jump to 133.7 in August, and above forecasts of 131.7.
This represented the highest since September 2000. The current conditions index rose to 173.1 from 172.8 while the expectations component improved to 115.3 from 109.3.
The labor differential increased to 32.5 from 30.2. The 12-month inflation gauge was unchanged at 4.7%.
Richmond Fed Manufacturing Index climbed 5 points to 29 in September following August’s 4 point increase to 24 and above estimates of 20.
This is a new record high for the index with data going back to 1993. However, the employment component dropped to 16 from 25, though wages increased to 33 from 27, and the workweek rose to 19 from 16.
New order volume checked in at 34 from 25.
Prices paid posted a 3.47% annualized rate of change, versus 3.31%, while prices received were 1.93% from 1.58%.
The 6-month business activity index was up 1 to 43, with employment at 23 and down from 28.
Wages were at 45 from 43, and new order volume at 37 from 40. The future price trends showed prices paid at 3.04% from 3.24%, with prices received at 2.37% from 2.63%.
Market Sentiment – The iShares 20+ Year Treasury Bond ETF (TLT) was down for a 3rd-straight session after kissing a low of $116.40.
Major support at $116.50 held into the closing bell with a move below $116.25 being a continued bearish development. Lowered resistance remains at $116.75-$117.
Market Analysis – The Spider Small-Cap 600 ETF (SLY) closed higher for the 2nd-straight session but has made lower lows throughout the month. Lowered resistance at $76-$76.50 held on the intraday test to $75.96.
A close above $77 would be a more bullish development that could lead to a retest of $78-$78.50 and fresh all-time highs.
The 50-day moving average was breached for the 2nd-straight session with upper support at $75.75-$75.25 getting stretched on early morning weakness to $75.70.
A move below the latter would suggest continued weakness towards the $75-$74.50 area.
RSI is trying to hold March support in the 40 area.
A move below this level would be a continued bearish development for a continued pullback towards 35-30 and February lows. Resistance is at 45-50.
The Spiders S&P Homebuilders ETF (XHB) fell for a 5th-straight session after tapping a low of $39.20.
Upper support at $39.25-$39 held with a move below the latter being a continued bearish development.
Near-term and lowered resistance is at $39.75-$40 and a downtrending 50-day moving average.
RSI is trying to level out with support at 35 in focus.
A move below this level would be a cautious signal for a retest to 30 and late February lows. Resistance is at 40-45.
All the best,
Roger Scott