U.S. markets were choppy throughout Thursday’s session after trading on both sides of the ledger before finishing mostly higher.

The Dow rose 0.2% after trading to an all-time intraday high of 26,458 while settling just below the 26,400 level and record close. The S&P 500 added 0.1% but fell shy of its record high of 2,852 by 4 points while finishing just below 2,840.

The Nasdaq slipped 0.1% after testing a high of 7,458 on the open before tumbling below 7,400 and a level that held into the closing bell. The Russell 2000 climbed 0.1% to reclaim the 1,600 level.

Utilities soared 1.5% to lead sector strength with Health Care and Materials rising 0.8% and 0.7%, respectively.

Energy paced the laggards after falling 0.9% while Real Estate and Financials slid 0.3%.

Global Economy – European markets showed continued weakness for the second-straight session after the European Central Bank left interest rates unchanged, as expected. Germany’s DAX 30 dropped 0.9% while the Stoxx Europe 600 stumbled 0.6%. UK’s FTSE 100 declined 0.4% and France’s CAC 40 fell 0.3%. The Belgium20 slipped 0.1.

The German January IFO business climate unexpectedly rose 0.4 to 117.6, stronger than expectations of -0.2 to 117.0 and matched the Nov reading as the highest since the data series began in 1991.

The German February GfK consumer confidence rose 0.2 to a record high of 11, stronger than expectations of no change at 10.8.

Asian markets were mostly lower and were led by Japan’s Nikkei 1.1% pullback. Hong Kong’s Hang Seng gave back 0.9% and China’s Shanghai declined 0.3%.

Australia’s S&P/ASX 200 dipped 0.1%while South Korea’s Kospi bucked the trend after surging 1%.

Jobless Claims rose 17,000 to 233,000 versus forecasts for 240,000.

December New Home Sales were at 625,000 versus expectations for a 640,000 unit pace.

Leading Indicators Index rose 0.6% to 107 in December, after rising 0.5% to 106.4 in November. Expectations were for a rise of 0.5% for the month.

January Kansas City Fed Manufacturing Index checked in at 16 versus consensus of 14.

Market Sentiment – The iShares 20+ Year Treasury Bond ETF (TLT) rebounded to test a high of $124.15. Resistance at $123.50-$123.75 and the 200-day moving average was cleared and will now try to hold as short-term support.

Fresh resistance is at $124.25-$124.50 on continued closes above $124.

Market Analysis The Spider Small-Cap 600 ETF (SLY) pulled back off Wednesday’s all-time high of $139.70 after testing a low of $137.54.

Fresh support at $137.50 held with risk to $136 on a close below this level. Resistance at $138.50-$139.

RSI is back in a downtrend after failing resistance at 70. Support is at 60 with risk to 50 on a move below this level.

The Financial Select Sector Spiders (XLF) traded to a fresh 52-week high of $30.13 before finishing slightly lower for the session. We mentioned earlier this month there was breakout potential to $29.50-$30 on continued closes above $28.25.

Continued closes above $30 could lead to a run towards $31-$31.50 over the near-term. Near-term support is at $29.75-$29.50.

RSI cleared December resistance at 80 with support at 75-70 on a close below this level.

Existing / New Position Update

TSLA remains within range and we are seeing very little institutional accumulation moving into the stock at this time.

I believe next few sessions we may see minor downside pressure, since the stock is increasingly vulnerable to corrective pressure and appears to be losing momentum.

The range is stable and volatility levels are fairly consistent throughout the option chain, telling us that close to the money traders are not expecting major move in either direction.

I’m also looking at two other spreads and will have one before end of the week.

I’m patiently waiting for volatility to increase, it remains near historic lows and will cause option premium to inflate once we see minor increase.

Rise in volatility gives us opportunity to profit while incurring less risk.

Roger Scott