U.S. markets closed higher for the 2nd-straight Monday as the major indexes continue to work their way back towards all-time highs.
The small-caps are still in correction territory but the overall market is only 4%-5% away from late September and early October peaks.
Economic news was light and ahead of Tuesday’s start of the FOMC meeting with an update from Fed Chair Jerome Powell on Wednesday.
Volatility was slightly higher but held key levels of resistance as Wall Street doesn’t expect much of a surprise in the meeting minutes.
The Russell 2000 rallied 0.7% following the morning run to 1,569.
Fresh and lower resistance at 1,570-1,585 held with a move above the latter and the 200-day moving average being a continuing bullish signal.
The Nasdaq rose 0.3% after trading to another 2019 high of 7,737.
The close above the 7,700 level was the first since early October and keeps fresh resistance at 7,750-7,800 in focus.
The S&P 500 gained 0.4% following the 4th-straight close above the 2,800 level and push to 2,835.
Lower resistance at 2,825-2,850 was cleared and held on the fresh yearly peak.
The Dow nudged up 0.3% following the intraday run to 25,924.
Lower resistance at 26,000-26,250 held for the 2nd-straight session with continued closes above the latter being a more bullish development.
Energy was the strongest sector after jumping 1.4%.
Financials, Consumer Discretionary and Industrials were up 1%.
Communication Services and Real Estate led sector laggards after falling 0.9% and 0.5%, respectively.
NAHB Housing Market Index was unchanged at 62 in March, missing estimates for a print of 63. The current single family index improved to 68 from 66 and the future index rose to 71 from 68.
The index of prospective buyer traffic dropped to 44 from 48. The report suggested some stabilization in the industry, but the decline in buyer traffic reveals some headwinds remain, including affordability.
Market Sentiment – The iShares 20+ Year Treasury Bond ETF (TLT) remains in a 7-session trading range with Monday’s high reaching $121.87.
Lower resistance at $122-$122.50 held with a close above the latter signaling a possible breakout to higher highs.
Near-term support is at $121.50-$121.
A close below $120.75 and the 50-day moving average would be a slightly bearish signal on the move below and out of the lower end of the current trading range.
Market Analysis – The Invesco QQQ Trust (QQQ) was up for the 5th time in 6 sessions after tapping a 2019 high of $178.99. Early and lower October resistance at $179-$179.50 was challenged but held.
A close above the $180 level could lead to a run towards $182.50-$185, depending on momentum.
Rising support is at $177.50-$177 following last week’s breakout above the $175 level. The 50-day moving average remains on track to clear the 200-day moving average on higher highs.
This would form a golden cross, if completed, and is typically a bullish technical signal.
RSI has cleared prior resistance from earlier this month at 70.
Continued closes above this level would signal additional momentum towards 75-80 and January 2018 highs.
Support is at 65-60 with a move below the latter signaling a possible near-term top for the QQQ’s.
The Spiders S&P Homebuilders ETF (XHB) snapped a 3-session slide after testing an intraday high of $38.25. Prior and lower resistance at $38.25-$38.50 was triggered but held.
Continued closes above $39 would be a more bullish development with upside potential towards $40-$40.50 over the near-term.
Support is at $38-$37.75.
A move below the latter would be a slightly bearish signal with additional weakness towards $37.25-$37 and the 50/ 200-day moving averages that are also in the process of forming a golden cross.
RSI is in a slight uptrend with resistance at 60. A move above this level would be a bullish signal for additional strength.
Support is at 50. A move back below this level would signal additional weakness towards 45-40 with the latter representing the early January low.
Volatility Index – The S&P 500 Volatility Index ($VIX) stayed slightly elevated throughout the session after tapping an intraday high of 13.80.
Fresh resistance at 13.50-14 was split but held with a move above 14.50-15 being a slightly bearish signal.
Near-term support is at 13-12.50 with a close below the latter being a bullish signal for higher market highs.
All the best,
Roger Scott.