U.S. markets showed overall weakness for the 2nd-straight session with the small-caps bucking the trend to close higher.

Corporate earnings and economic news dominated the headlines once again with Friday’s jobs report now in focus.

The Russell 2000 rose 0.4% following the morning pop to 1,587. Major resistance at 1,600 held for the 4th-straight session along with the 50/200-day moving averages on the midday weakness.

The Nasdaq dipped 0.2% following pullback to 7,976.

Fresh and upper support at 8,000-7,950 was breached but held with a move below the latter signaling additional weakness.

The Dow dropped 0.5% after testing an intraday low of 26,180.

Upper support at 26,250-26,000 was breached but held with a close below the latter being a bearish development.

The S&P 500 gave back 0.4% following the morning backtest to 2,900.
This level has been holding for 14-straight sessions with a close below 2,900 opening up risk towards 2,875-2,850.

Healthcare led strength strength after gaining 0.4% while Real Estate climbed 0.2%.

Energy was the weakest sector for the 2nd-straight session after sinking 1.7%. Materials and Technology were down 0.5%.

Global Economy – European markets were mostly lower after the Bank of England kept rates unchanged.

France’s CAC 40 dropped 0.9% and the Belgium20 declined 0.7%. The Stoxx 600 Europe was down 0.6% and UK’s FTSE 100 fell 0.5%. Germany’s DAX 30 added a point, or 0.0.1%.

Asian markets were mixed with China’s Shanghai and Japan’s Nikkei remains closed for holidays.

Hong Kong’s Hang Seng rose 0.8% and South Korea’s Kospi added 0.4%. Australia’s S&P/ASX 200 declined 0.6%.

Challenger Job-Cut Report announced layoffs at 40,023. Compared to last year, planned layoffs are up 10.9% year-over-year versus 0.4% in March.

The sectors leading the planned layoffs were consumer products, industrial goods, and services, and Challenger warns that those portend trouble for the economy.

Announced hiring climbed to 241,900 led by retail’s 250,000 surge.

Jobless Claims were unchanged at 230,000 versus expectations for a drop of 215,000. Continuing claims rose 17,000 to 1,710,000 after a flat reading at 1,654,000 previously.

Q1 Productivity grew at a hefty 3.6% pace, versus the 1.3% clip in Q4. Unit labor costs dropped to -0.9% versus the prior 2.5% rate. Output climbed 4.1% last quarter after a 2.6% Q4 rate.

Hours worked slowed to 0.5% from 1.3% while compensation per hour was at 2.6%% from 3.9%.

Real compensation dipped to a 1.7% pace % from 2.3% while the price deflator fell to -0.1% from 1.6%.

On a 12-month basis, productivity sped up to 2.4% year-over-year from 1.7% while unit labor costs slowed to 0.1% year-over-year from 1.2%.

Factory Orders were up 1.9% in March, versus forecasts of 1.5%, after falling 0.3% in February.

The 2.7% jump in durable orders was nudged down to 2.6% while transportation orders climbed 7.0% versus -2.9% previously. Excluding transportation, factory orders were up 0.8% from 0.3%.

Nondefense capital goods orders excluding aircraft surged 1.4% from unchanged while shipments increased 0.7% after a 0.5% gain previously.

Non-defense capital goods shipments ex-aircraft were flat from 0.3%. Inventories rose 0.4% versus 0.3% with the inventory-shipment ratio steady at 1.36 for a third straight month.

Market Sentiment – The iShares 20+ Year Treasury Bond ETF (TLT) fell for the 1st time in 3 sessions following the pullback to $123.04. Near-term and upper support at $123.50-$123 was breached and failed to hold.

A move below the latter opens up risk towards $122.50-$122 and the 50-day moving average.

Lowered resistance is now at $123.75-$124.25 with a move above $124.50 signaling a return of strength.

Market Analysis – The Spider S&P 500 ETF (SPY) was down for the 2nd-straight session following the backtest to $289.52. Near-term and upper support at $290-$289.50 was breached but held.

A move below $288-$287.50 would be a slightly bearish signal.

Current resistance is at $292-$292.50.

Continued closes above the latter would be a more bullish development for a possible run towards $294.50-$295 and fresh all-time highs.

RSI is is a downtrend with support at 55-50 with the latter holding since early January.

A close below this level would be a bearish development for additional weakness. Resistance is at 65-70.

The Consumer Staples Select Spiders (XLP) tested a low of $56.69 with near-term and upper support at $57-$56.50 getting breached and failing to hold.

A move below below the latter opens up risk towards $56-$55.50 and the 50-day moving average.

Lowered resistance is at $57.50-$58.

RSI is in an downtrend with support at 60-55 with a move below the latter signaling additional weakness. Resistance is at 65-70.

We are holding the following positions:

AMAT:  +25% Allocation  |  $41.27 Protective Stop Loss  |  $49.92 Profit Objective
LRCX:  +25% Allocation  |  $188.97 Protective Stop Loss  |  $231.54 Profit Objective
MCHP:  +25% Allocation  |  $91.42 Protective Stop Loss  |  $110.04 Profit Objective
SBUX:  +25% Allocation  |  $70.49 Protective Stop Loss  |  $86.58 Profit Objective

Option Traders – the following (regular monthly) options meet our criteria:

AMAT – 19JUL $43 Strike Price CALL (Expires July 19, 2019)
LRCX – 20SEP $220 Strike Price CALL (Expires September 20, 2019)
MCHP – 19JUL $97.5 Strike Price CALL (Expires July 19, 2019)
SBUX – 19JUL $77.5 Strike Price CALL (Expires July 19, 2019)

All the best,
Roger Scott.