Bulls Show Strength Ahead of Busy Week for 3Q Earnings

U.S. markets got off to a good start on Monday after China’s Vice Premier Liu He made some positive comments over the weekend about substantial progress made with the U.S. phase-one trade deal. President Trump also confirmed a potential trade deal with China is coming along well, after mentioning earlier this month he would like a deal signed by the middle of next month.

The overall market gains come ahead of the busiest week for the 3Q earnings season with the major indexes once again pushing near-term resistance levels. The continued strength in the Financials, and Transports, were a bullish signal as the former accounts for nearly 20% of the small-cap index.

The Russell 2000 showed the most strength after surging 1% and tapping an intraday high of 1,557. Prior and lower resistance from early September at 1,550-1,565 was cleared and held with a close above the latter being a bullish signal for a run towards 1,575-1,590.

The Nasdaq jumped 0.9% following the intraday run to 8,164. Prior and key resistance at 8,150 was cleared and held with more important hurdles at 8,200-8,250 and the mid-September high at 8,243.

The S&P 500 rose 0.7% after trading to an afternoon peak of 3,007. The close above lower resistance at the 3,000 level was a bullish signal and keeps upper resistance at 3,025 and the record peak at 3,027 in play.

The Dow added 0.2% while trading in a 105-point range and testing a session high of 26,852. Near-term and lower resistance at 26,800-27,000 was cleared and held with a close above the latter getting 27,200-27,400 and fresh all-time highs back in focus.

Energy and Financials were the strongest sectors after soaring 1.8% and 1.4%, respectively, while Technology gained 1.1%. Materials and Healthcare were the only sector laggards after slipping 0.3% and 0.1%.