U.S. markets closed higher after reaching their best levels shortly after the open.

The gains were attributed to easing concerns over the prospects of a global trade war and the possibility of talks between North and South Korea.

The Russell 2000 rallied 1% after reaching 1,562 into the closing bell while clearing and holding its 50-day moving average. This was a bullish development. The Nasdaq was up 0.6% after testing an intraday high of 7,378 and is just 2% away from all-time highs.

The S&P 500 added 0.3% while trading to a high of 2,732 and holding 2,700 on weakness afterwards. The Dow rose 9 points, or 0.04%, after reaching a peak of 24,995 and failing the 25,000 level for the second-straight session.

Both indexes remain below their 50-day moving averages.

Materials and Consumer Discretionary advanced 1.1% and 0.7%, respectively to lead sector strength. Utilities sank 1.3% while Health Care gave back 0.2% and were the only sector laggards.

Redbook Store Sales were up 3.8% for the year in the week ending March 3rd.

January Factory Orders were down 1.4% and below expectations for a decline of 1.3% for the month.

U.S. chain store sales declined 0.8% to 114.8 for the week ending March 3rd. Compared to the same week last year, sales slowed to 1.9% year-over-year from 2.3%.

Market Sentiment – Dallas Fed Robert Kaplan still projects 3 rates hikes this year in his comments for a CNBC interview. His base case hasn’t changed, and he wants to be tightening rates sooner rather than later, as it gives the Fed the best chance of prolonging the recovery. He said he will see later in the year if his forecast needs to change.

Kaplan is most sensitive to the unemployment rate, and believes it should drop below 4% this year. He acknowledged the recent tax package caused an upgrade in outlooks on the economy, but elements of the bill and the new budget suggest an increased debt load which could eventually turn into an economic headwind.

Kaplan went on to say part of the increase in yields likely is due to expectations on increased growth, along with increased Treasury supply. On the tariff and trade talks, he’s taking a wait and see approach, though he noted that our trade relationships with Mexico and Canada are critical.

The iShares 20+ Year Treasury Bond ETF (TLT) snapped a two-session losing streak after closing higher and trading up to $118.68. Resistance at $118.50-$119 was s-lit but levels that held i to the closing bell.

Support remains at $118-$117.50 with continued risk to $116.50-$116 on a close below the latter.

Market Analysis – The PowerShares QQQ (QQQ) traded higher for a 3rd-straight session after reaching a peak of $169.11 to continue its rebound off its 50-day moving average.

Resistance at $170-$170.50 held and represents a double-top formation from the January and February highs north of $170 and just south of $171.

We have mentioned continued closes above the latter would be a bullish development for a possible trip towards $172.50-$175. Rising support is at $168-$167.50.

RSI is trying to clear the 60 level and is on track to test December and early January resistance at 70 on continued strength. Support is at 50.

The Materials Select Sector (XLB) was up for a 2nd-straight session after testing a high of $60.85. Near-term resistance is at $61-$61.25 and the 50-day moving average held with continued closes above the latter being a bullish development.

Support is at $60-$59.50 with a move below the latter being a bearish signal. Last Friday’s intraday low tapped $58.37.

RSI is approaching resistance at 50 with continued strength leading to a run towards 55-60. Support is at 45-40.

Volatility Index – The S&P 500 Volatility Index ($VIX) bubbled to a high of 19.64 intraday with lower resistance at 20-21.50 holding. Upper support at 17.50-17 held on the on the morning low of 17.68.

A close above 20, or a move below 17.50, will be excellent clues in determining the next possible significant market move up or down.

The Profit Trends portfolio is allocating:

50% in ZIV closed on Tuesday at 67.56
30% in EDV closed on Tuesday at 110.26
20% in SHY closed on Tuesday at 83.41

All the best,
Roger.