U.S. markets showed strength for a 2nd-straight session but settled mixed as the blue-chips struggled. Some of the nervousness came after White House trade chief Robert Lighthizer warned that negotiations to end the tariff war with China were at risk of failing.
Lighthizer went on to say major issues needed to be resolved before an agreement was reached and that he could not predict success at this point.
Despite the somber statement, volatility settled near a monthly low and is pushing major support levels.
The Nasdaq led for the 2nd-straight session after rising 0.4% while testing a 2nd-half high of 7,611. Prior and lower resistance at 7,600-7,650 was cleared but held with the early March peak at 7,643.
The S&P 500 added 0.3% following the late day push to 2,798.
Fresh and lower resistance at 2,800-2,825 held with continued closes above the latter being a more bullish signal.
The Russell 2000 edged up 0.1% after trading an midday peak of 1,555.
Prior and resistance at 1,550-1,560 was split but held with a move above the latter getting 1,575-1,585 and the 200-day moving average in play.
The Dow declined 0.4% following the intraday pullback to 25,522. Current and upper support at 25,500-25,250 held with a golden cross in the process of forming on higher highs.
Healthcare, Utilities and Energy were the strongest sectors after rising 0.7%. Technology was higher by 0.6%
Industrials and were the only sector laggard after falling 0.8%.
Global Economy – European markets were mixed ahead of U.K. Prime Minister Theresa May’s revised Brexit deal that was later rejected by parliament after the close.
The Belgium20 and UK’s FTSE 100 rose 0.3% while France’s CAC 40 nudged up 0.1%. Germany’s DAX 30 dipped 0.2% and the Stoxx 600 Europe slipped 0.1%.
Asian markets were mostly higher, excluding Australia’s S&P/ASX 200 which was down 0.1%.
Japan’s Nikkei surged 1.8% and Hong Kong’s Hang Seng soared 1.5%. China’s Shanghai jumped 1.1% and South Korea’s Kospi gained 0.9%.
NFIB Small Business Optimism Index rose 0.5% to 101.7 in February after dropping 3.1% to 101.2 in January. The latter was a 2-year low, and the February bounce ended a 5-month string of declines, the longest since 1998.
The index hit a record high of 108.8 last August. Half of the 10 components improved, including expectations of a better economy and increased capital spending.
CPI edged up 0.2% in February with the core rate rising 0.1%. On a 12-month basis, the headline price index dipped to 1.5% year-over-year from 1.6%, with the core slipping to 2.1% versus 2.2% year-over-year.
Energy prices rose 0.4% after dropping 3.1% in January. Services prices were up 0.1% from 0.2%. Housing costs were up 0.2%, the same as January, with owners equivalent rent 0.3% higher as well.
Foods and beverages costs double to a 0.4% increase from 0.2%. Transpiration costs were up 0.1% from -1.3%.
Apparel rose another 0.3% from 1.1% previously. Education was up 0.2% while medical care prices fell 0.2%. Recreation declined 0.4% while commodities were up 0.2%.
Tobacco prices climbed 0.5% after a prior 0.3% gain.
Also, real average hourly earnings rose 0.3% on the month and were up 1.9% year-over-year versus 1.6%. Real average weekly earnings fell 0.1% last month and slowed to 1.6% year-over-year from 1.9%.
Redbook Store Sales were up 4.4% for the year in the week ending March 9th
Chain Store Sales jumped 1.2% in the week ending March 9th. The 12-month accelerated to a 3% year-over-year clip from 2.3% previously.
Market Sentiment – The iShares 20+ Year Treasury Bond ETF (TLT) was up for the 6th time in 7 sessions after testing a high of $122.23.
Prior and upper resistance at $121.50-$122 was cleared and held with fresh hurdles at $122.50-$123 on continued strength.
Rising support is at $121.50-$121.
Market Analysis – The Russell 3000 Index ($RUA) closed higher for the 2nd-straight session after reaching an intraday peak of 1,653. Prior and lower resistance from mid-February at 1,650-1,660 was cleared but held.
A move above the 1,165 level would be a more bullish development for a possible breakout towards 1,675-1,700.
Current support is at 1,640-1,630 and the 200-day moving average. A close below the latter would be a bearish development and signal another possible near-term top.
RSI is in a back in a uptrend with resistance at 60.
Continued closes above this level would be a bullish signal for a move towards 65-70. Fresh support is at 55-50.
The Consumer Staples Select Spiders (XLP) extended its winning streak to 3-straight sessions after trading to a morning peak of $54.62. Prior resistance from early February at $54.50-$54.75 was breached but held.
Continued closes above $55 would be a more bullish signal for a possible run towards $56-$56.50.
Near-term support is at $54.25-$54 with a move below the latter opening up risk towards $53.50-$53. The 50-day moving average has cleared the 200-day moving average to form a golden cross.
This technical pattern is a bullish signal for higher highs.
RSI is flatlining with resistance at 60.
A close above this level could lead to continued strength towards 65-70 with the latter representing the early February peak. Support is at 55-50 with a move below the latter signaling additional weakness.
Existing Position Update
Liuidated VMW for a solid profit and very little hold time.
Expecting more upside to develop in the overall market.
Still positive on TSLA and will give it few more sessions.
Will look at bear call spreads next few sessions, since pullback is near.
Volatility is low and no word from Trump on China is bullish.
Roger Scott.