U.S. markets showed strength throughout Tuesday’s session as better-than-expected earnings and mostly positive economic news helped fuel the rally.

The gains propelled the S&P 500 and Nasdaq to fresh record closes as both indexes came within 5 points of setting all-time highs.

The Russell 2000 showed the most strength after zooming 1.6% and testing a session high of 1,587.

Prior and lower resistance at 1,585-1,600 was cleared and held with additional hurdles at 1,625-1,650 on continued closes above the latter.

The Nasdaq surged 1.3% after tapping a high of 8,128.

Fresh and lower resistance at 8,100-8,150 was cleared and held with fluff to 9,000-9,050 on a close above the latter.

The S&P 500 rallied 0.9% following the intraday push to 2,936.

Near-term and lower resistance at 2,940-2,950 held with breakout potential towards 2,975-3,000 on a close above the latter.

The Dow rose 0.6% after trading to a fresh 2019 high of 26,695.

Prior and lower resistance at 26,500-26,750 was cleared and held with a close above the latter getting 27,000 and all-time highs in play.

Healthcare led sector strength after jumping 1.6% while Communication Services rose 1.2%.

Consumer Staples and Energy were the only sector laggards after falling 0.3% and 0.1%, respectively.

Richmond Fed Manufacturing Index for April fell 7 points to 3 after falling 6 points to 10 in March. Expectations for a rise of 1 to 11. The employment component was at 18 from 23, with wages at 25 from 33.

New order volume was -2 from 9. Prices paid were 3.04% from 2.84%, with prices received at 1.84% from 2.07%. The 6-month shipment index rose to 49 from 40.

The future employment reading inched up to 15 from 13, with prices paid at 2.45% from 2.10%.

FHFA House Price Index rose 0.3% to 272.8 in February, missing forecasts for a rise of 0.4%, and follows January’s 0.6% increase to 272.1.

On a 12-month basis, the index posted a 4.9% year-over-year growth clip. Home prices increased in 7 of the 9 regions, led by New England with weakness in the Mid Atlantic and Mountain regions.

All regions registered 12-month gains.

New Home Sales rose 4.5% to 692,000 in March, beating estimates of 645,000, and follows February’s stronger than expected 5.9% increase to 662,000.

The rise in sales saw the months’ supply fall to 6 from 6.3. Regionally, sales were mixed with a 17.6% jump in the Midwest, a 6.7% rise in the West, and a 3.6% advance in the South.

The Northeast sank 22.2%. Prices were slightly disappointing with the median declining 4% to $302,700 after the prior 3.9% gain to $315,200 last month.

The 12-month pace also slid to -9.7% year-over-year, versus -3.7%.

Redbook Store Sales were up 6% for the year in the week ending April 20th.

Market Sentiment – The iShares 20+ Year Treasury Bond ETF (TLT) rebounded after trading to a high of $122.70.

Lower resistance at $122.50-$123 was cleared and held with a move above $124 being a more bullish signal.

Shaky support remains at $122.25-$121.75 and the 50-day moving average.

Market Analysis – The Spider S&P 500 ETF (SPY) broke out of a 6-session trading range after tapping an all-time intraday high of $293.14. Fresh and lower resistance at $293-$293.50 was cleared but held.

Continued closes above the latter keeps blue-sky territory open towards $295-$297.50 depending on momentum.

New support is at $291.50-$291. A move below $290 would indicate a possible near-term top.

RSI is showing renewed strength with fresh resistance at 75-80.

The latter represents January 2018 peaks and a level that would also signal overbought territory. Support is at 70.

The Materials Select Sector (XLB) showed strength after trading to an intraday high of $57.87. Near-term and lower resistance at $57.50-$58 was cleared and held.

Continued closes back above $58.50 would be a more bullish signal for a possible run towards $59.50-$60. The 52-week peak is at $61.21.

Current support is at $57.25-$56.75.

A close below $56.50 would be a slightly bearish signal with risk towards $56-$55.50 and the 50-day moving average.

RSI is trying to level out after holding support at 60. A close below this level would signal additional weakness towards 55-50. Resistance is at 65.

Continued closes above this level would be a bullish signal for additional strength towards 70-75.

Volatility Index – The S&P 500 Volatility Index ($VIX) stayed relatively relaxed after bubbling to an opening high of 12.69.
Lower resistance at 13-13.50 easily held with risk towards 14-14.50 and the 50-day moving average on a close above the latter.

The fade to 12.08 afterwards and close back below the 12.50 level was slightly bullish with upper support at 12.25-11.75 getting breached but holding.

We are allocating the portfolio as follows:

60% in ZIV closed on Tuesday at 76.49
40% in EDV closed on Tuesday at 114.30

All the best,
Roger Scott.