Bulls Get Monthly Win but Third Quarter Mixed

U.S. markets showed strength throughout Monday’s session after Treasury Secretary Steve Mnuchin denied a report over the weekend that the Trump administration was looking to restrict China's access to U.S. markets. This was the catalyst for Friday’s pullback that included chatter of delisting China stocks on U.S. indexes.

White House adviser Peter Navarro also reiterated Mnuchin’s message ahead of the open with the gains wrapping up a positive month for the major indexes. Volatility eased while closing below major support levels and giving an indication upcoming 3Q earnings will play more of a role in market direction than politics.

The Nasdaq jumped 0.8% after trading to a midday high of 8,012. Prior and lower support at 8,000-8,050 was cleared but held by less than a point. A close above the latter and the 50-day moving average would be a more bullish signal for a retest towards 8,100-8,150.

The S&P 500 climbed 0.5% following the intraday run to 2,983. Lower resistance at 2,975-3,000 was cleared and held by over a point with continued closes above the latter keeping 3,025 and fresh all-time highs in play.

The Dow added 0.4% after reaching an intraday peak of 26,998. Near-term and lower resistance at 27,000-27,250 held with a move above the latter getting the July all-time high at 27,398 in focus.

The Russell 2000 nudged up 0.2% following the 2nd half trip to 1,530. Prior and lower resistance at 1,525-1,540 was cleared but held by a couple points with continued closes above 1,550 signaling a near-term bottom.

For the month of September, the Dow jumped 2%, the S&P 500 soared 1.7% and the Nasdaq added 0.5%. For the quarter, the Dow and the S&P 500 both rallied 1.2%, while the Nasdaq fell 0.1%. The Russell 2000 was up 1.9% for September but lost 2.2% for the 3rd quarter.

Technology led sector strength after rallying 1.1% while Consumer Discretionary, Healthcare and Materials rose 0.9%. Energy and Financials were the only sector laggards after falling 0.7% and 0.2%, respectively.

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Bed Bath & Beyond (BBBY) upgraded to Outperform from Neutral at Wedbush
Restaurant Brands (QSR) upgraded to Neutral from Underperform at Longbow
Wells Fargo (WFC) upgraded to Buy from Hold at Argus

Humana (HUM) downgraded to Market Perform from Outperform at BMO Capital
SunCoke Energy (SXC) downgraded to Neutral from Buy at B. Riley FBR
U.S. Bancorp (USB) downgraded to Underperform from Neutral at BofA/Merrill

Before the open: McCormick & Company (MKC)
After the close: Landec (LNDC), NovaGold Resources (NG), Stitch Fix (SFIX), United Natural Foods (UNFI)

Tuesday's economic reports (EST): 
Redbook - 8:55am
PMI Manufacturing Index - 9:45am
ISM Manufacturing Index - 10:00am
Construction Spending - 10:00am

Gold closed at $1472.90 an ounce, down $33.50
Silver settled at $17.00 an ounce,  down $0.65
Copper finished at $2.58 a pound, down $0.02
Crude Oil was at $54.29 a barrel, down 1.91
Bitcoin Investment Trust (GBTC) ended at $10.59 up $0.76

I hope this helps you prepare for the trading day. Make it a great one!

   Todd Mitchell

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