The Russell 2000 was up 0.67% and Copper was up 0.65%

Highlights: 

Market Recap:  The S&P 500 closed the day at 2889.67, up 0.09%.  The US 10 year Treasury yield was flat on the day, with the benchmark yield closing at 2.09%. The US Dollar was also flat on the day and Gold finished down -0.12%.  The Russell 2000 was up 0.67% and Copper was up 0.65%.

Sector Spotlight: The real estate sector led all sectors, gaining 1.09% on the day (XLRE).  Real estate remains in a positive trend relative to the broad market. The real estate sector has broken out above resistance, successfully re-tested, and started the next move upward apparently.  Will this be like the many false moves we have been witnessing?

 

Russell 2000: The Russell 2000 was stronger than the S&P 500 last week.  However, the Russell 2000 has been a relative laggard compared to the S&P 500.  The Russell 2000 remains below the 200 day moving average and in a negative trend.

 

Lumber/Gold:  The lumber to gold ratio has rallied enough to break above the 200 day moving average (2.5% above).  This is a positive trend signal and suggests that equity market volatility may be short-lived.  This relationship is one of the many that has historically led the stock market.  Currently, this relationship is flashing positive signs.  Can the move hold, or is it like the rally we saw at the beginning of 2019?

 

VIX: The volatility index (VIX) is showing a series of higher lows and consolidation during the most recent range bound behavior of the overall market.  The RSI has broken below the important 50 line and the current close of the VIX is below the 200 day moving average.  The 200 day moving average is upward sloping, confirming the more defensive posturing within the equities and fixed income markets.  Most of the market divergences that have been flashing “yellow” suggested a higher volatility regime.  The VIX has since confirmed.  The question is whether volatility will breakout to the upside and challenge the highs of 2019, or whether it will break back down to the low volatility regime witnessed during the 2017 market.

 

Futures Summary: 

News from Bloomberg:

Mario Draghi pushed the ECB closer to pumping more stimulus into the economy, stressing that rate cuts and asset purchases are in the toolkit. "If the crisis has shown anything, it is that we will use all the flexibility within our mandate," he told the annual ECB forum in Sintra. Money markets are pricing in a 10 basis-point rate cut by December.

Global stocks and bonds jumped, while the euro tumbled as Draghi's comments added fuel to investors' hopes for easier monetary policies from the world's biggest central banks. European shares reversed losses and Asian equities halted a four-day losing streak. Ten-year bund yields hit a record-low. Treasuries rallied with gold and the yen. The dollar edged up. Oil dropped.

The U.S. plans to send about 1,000 more troops to the Middle East as tension mounts after last week's tanker attacks. But President Trump seemed to downplay them. "So far, it's been very minor," he told Time. There's less cause for concern than before because the U.S. gets very little oil from the region, he said. Check out our QuickTake on the U.S.-Iran conflict.

Facebook's cryptocurrency plans: Libra may launch next year and be what's known as a stablecoin—a digital currency supported by established government-backed money and securities. The goal is to avoid massive fluctuations in value, so it can be used for everyday transactions more easily than more volatile ones, like Bitcoin. Facebook shares rose pre-market. Here's a look at who's backing the project, and who's not.

Hong Kong leader Carrie Lam continued to hold on to her job after refusing to quit or officially withdraw her extradition bill that sparked the biggest protests in the city's history. Instead, she apologized. Here's a look at what happens if Lam resigns.