U.S. markets were choppy but traded in a tight range throughout the session as Wall Street awaited President Trump’s decision on the Iran nuclear agreement.

There was a little push into positive territory after the President announced the U.S. would pull out of the deal adding that powerful sanctions will be placed on Iran.

Volatility was slightly elevated but is not at at alarming level as the market finished flat for the session with some momentum into the close.

The Russell 2000 held up well after gaining 0.5% and trading in an 10-point range while reaching a peak of 1,586 ahead of the closing bell. The Nasdaq rose just under 2 points, or 0.02%, following a backtest to 7,224 while holding the 7,200 level for the 3rd-straight session.

Both indexes remain above their 50-day moving averages.

The Dow added nearly 3 points, or 0.01%, after testing a low of 24,198 but has been holding fresh support at 24,000 for three-straight sessions.

The S&P 500 slipped less than a point, or 0.03%, after trading down to 2,655 and in a 21-point range for the session. Both indexes failed their 50-day moving averages for a second-straight session.

Energy was up 0.8% while Industrials and Financials were up 0.7% to lead sector strength. Utilities got hammered for 2.5% to easily pace sector laggards with Healthcare sinking 0.8%. Real Estate fell 0.7%.

Global Economy – European markets were mixed but remained near 3-month highs. The Belgium20 gained 0.6% while the Stoxx 600 Europe was up 0.1%. UK’s FTSE 100 was off a point, or 0.02%.

Germany’s DAX 30 was lower by 0.3% and
France’s CAC 40 was down 0.2%.

German March industrial production rose 1%, stronger than expectations of 0.8%.

The German March trade balance was in surplus by 25.2 billion euros, wider than expectations of 22.5 billion euros and the largest surplus in two years.

March exports rose 1.7%, below forecasts of 1.8%. Imports unexpectedly fell 0.9%, missing expectations for a gain of 1%.

The German March current account balance was in surplus by 29.1 billion euros, wider than expectations of 27 billion euros and the biggest surplus in a year.

Asian markets were mostly higher with South Korea’s Kospi bucking the trend after returning from a holiday and slipping 0.5%.

Hong Kong’s Hang Seng showed the most strength after rising 0.8% while China’s Shanghai rallied 0.8%. Japan’s Nikkei climbed 0.2% and Australia’s S&P/ASX 200 was higher by 0.1%.

The China April trade balance was in surplus by $28.78 billion, wider than expectations of $27.75 billion. April exports rose 12.9% year-over-year, stronger than expectations of 8.0%. April imports were up 21.5%, topping forecasts of 16%.

The JOLTS report showed job openings climbed 472,000 to a record 6.55 million in March. A deeper look at the numbers showed the job openings rate rose to 4.2% from 3.9% while hirings fell another 86,000 to 5,425,000 with the rate steady at 3.7%.

Quitters increased 136,000 to 3,344,000. The rate rose to 2.3% from 2.2%. The report continues to show a very tight labor market.

U.S. chain store sales were up 0.6% in the week ending May 5th, recouping almost half of the prior week’s 1.4% decline. On a 12-month basis, sales accelerated 3.8% year-over-year, versus 2.4%.

Dollar stores led the way, followed by on-line retailers, discounters, traditional grocery, and drug stores. However, the report also noted Q1 sales are coming in slightly below the 2.9% year-over-year rate from Q4.

Redbook Store Sales were up 4.2% for the year in the week ending May 5th.

April NFIB Small Business Optimism Index level checked in at 104.8, slightly below forecasts of 104.9.

Market Sentiment – Fed Chair Powell said that Fed policy normalization has proceeded without disruption to financial markets, and market participants’ expectations for policy seem reasonably well aligned with policymakers’ expectations.

The iShares 20+ Year Treasury Bond ETF (TLT) fell for the second-straight session after trading down to $118.30.

Upper support at $118.75-$118.50 failed to hold but a continuing mini-trading range remains. Lowered resistance is at $119-$119.25 and the 50-day moving average with a close above the latter being a slightly bullish development.

Market Analysis – The Russell 3000 Index ($RUA) slipped for the first time in three sessions despite making an intraday run to 1,590. Resistance at 1,585-1,595 and the 50-day moving average has been holding since late April and for the second-straight session.

Continued closes above 1,600 would be a bullish development for a possible momentum push towards 1,625-1,650. Support is at 1,575-1,570 with a move the latter likely leading to a continued backtest towards 1,555-1,550 and the 200-day moving average.

RSI is back in an uptrend after clearing support at 50 and is a bullish signal as long as this level holds throughout the week. Resistance is at 55-60 with the latter representing the early March high.

The Spider S&P Retail ETF (XRT) fell for the third time in four sessions with the low reaching $44.49. We mentioned the tight trading range between $44-$45 that was developing in April and an area that is back in play following the close below the 50-day moving average.

Support is at $44.50-$44 with a move below the latter likely signaling additional weakness. Resistance is at $45-$45.50.

RSI is trying to clear multi-month resistance at 55-60. A move above this level would be a bullish development for a possible run towards 70 and January peaks. Current support is at 45-40.

Existing Position Update

Stocks are waiting for Trump and his decision re IRAN.

Price backed off 50 day line yesterday…which is not positive for overall market.

If news is bullish and if FED data is neutral – we could see another attempt by SP to rally above 50 day line.

Positions remain stable and we should see another major leg up in price if in fact global tension remains stable.

Roger Scott