U.S. markets closed sharply higher on Friday after worries over tariffs on steel and aluminum faded as Wall Street focused on an unexpectedly strong jobs report and news that President Trump has accepted an invitation to meet North Korea’s leader.

The Nasdaq zoomed 1.8% after going out at a session and all-time high of 7,560.

It was the first new record high since late January with the index rising 4.2% for the week.

The Russell 2000 surged 1.6% after making a run towards the 1,600 level into the closing bell but falling shy by 3 points.

The index is just over 1% away from setting fresh all-time highs after adding 4.3% for the week.

The S&P 500 soared 1.7% after closing at its session high of 2,786 and was up 3.5% for the week. The Dow jumped 1.8% after trading to a high of 25,336 to close above the 25,000 for the first time since early February.

For the week, the blue-chips gained 3.3% with both indexes clearing their 50-day moving averages following Friday’s gains.

Financials and Industrials led sector strength after popping 2.4% and 2.2% while Technology and Energy were up 1.9%.

Financials and Industrials were also up 4.4% for the week and Technology gained 4.2%. There were no sector laggards on Friday, or for the week.

Global Economy – European markets closed mostly higher aside from Germany’s DAX 30 which slipped 0.1% following weaker-than-expected economic data.

France’s CAC 40 and the Stoxx Europe 600 advanced 0.4% while the Belgium20 and UK’s FTSE 100 added 0.3%.

UK January manufacturing production rose 0.1% month-over-month, weaker than expectations of 0.2%. January industrial production was up 1.3%, missing forecasts of 1.5%.

The German January trade balance shrank to a surplus of 17.4 billion euros, narrower than expectations of 18.1 billion euros and the smallest surplus in a year.

January exports unexpectedly fell 0.5% month-over-month, below forecasts for a rise of 0.3%. January imports fell 0.5%, weaker than expectations for a dip of 0.1%.

German January industrial production unexpectedly fell 0.1%, weaker than expectations of for a gain of 0.6% month-over-month.

Asian markets were higher across the board after President Trump agreed to meet with North Korean leader Kim Jong Un.

Hong Kong’s Hang Seng and South Korea’s Kospi were higher by 1.1% while China’s Shanghai was up 0.6%. Japan’s Nikkei gained 0.5% and Australia’s S&P/ASX 200 advanced 0.3%.

China February CPI rose 2.9% year-over-year, stronger than expectations of 2.5% and the fastest pace of increase in over 4 years.

February PPI rose 3.7% year-over-year, below forecasts of 3.8% and the slowest pace of increase in 15 months.

China February new yuan loans rose 839.3 billion yuan, weaker than expectations of 900 billion yuan. February aggregate financing rose 1.17 trillion yuan, topping expectations of 1.067 trillion yuan.

Japan January overall household spending unexpectedly rose 2.0% year-over-year, stronger than expectations for decline of 1.0%.

Non-farm payrolls rose 313,000 in February, easily topping expectations for the addition of 205,000 jobs last month. Average hourly earnings grew 2.6% over the prior year, versus forecasts for a 2.8% year-over-year increase.

January Wholesale inventories rose 0.8%, topping estimates of 0.7%, but sales dropped 1.1%.

Atlanta Fed’s Q1 GDPNow estimate was trimmed to 2.5% from 2.8%, despite firm jobs report.

The nowcast of first-quarter real consumer spending growth fell from 2.5% to 2.2% and the nowcast of first-quarter real private fixed investment growth fell from 3.4% to 2.4%.

Baker-Hughes reported that the U.S. rig count was up 3 rigs from last week to 984, with oil rigs down 4 to 796, gas rigs up 7 to 188.

The U.S. Rig Count is up 216 rigs from last year’s count of 768, with oil rigs up 179, gas rigs up 37. The U.S. Offshore Rig Count is down 1 rig to 13 and down 7 rigs from last year’s count of 20.

Market Sentiment – Kansas City Fed President Esther George said above trend growth this year would likely leader to tighter conditions in labor and product markets and, possibly, higher inflation.

She said it will be important for the Fed to continue its gradual normalization of interest rates to sustain the expansion without pushing the economy beyond its capacity limits and creating inflationary pressures.

Boston Fed Eric Rosengren said 4 rate hikes are likely needed this year, while regular, gradual rate hikes were appropriate.

He did wonder whether a trade war or geopolitical surprise could derail policy tightening, but was equally encouraged by fiscal stimulus, large tax cut and overseas strength since the December FOMC.

He characterized recent economic data as good, but seeking to avoid a boom and bust economy.

He also anticipates firmer inflation and upward pressure on wages.

Fedspeak will quiet with just over a week to go before the March 20th-21st FOMC meeting, though at the very back end of the week some of the the Fed regional banks from meet with Atlantic Fed Raphael Bostic possibly making comments.

The iShares 20+ Year Treasury Bond ETF (TLT) tested to a low of $117.59 after trading in negative territory throughout the session.

Lower support at $118-$117.50 held with a move below the latter getting $116.50-$116 and fresh 52-week lows in play. Lowered resistance is at $118.25-$118.50.

RSI is back in a downtrend after failing near-term resistance at 50.

Current support is at 40 with a move below this level signaling lower lows and a possible backtest to 30.

Market Analysis – The Spider Small-Cap 600 ETF (SLY) has traded higher for the 5 of the past 6 sessions with Friday’s peak reaching $138.09.

Near-term resistance is at $138.50-$139 with a move above the latter getting all-time highs north of $140 in play. Rising support is at $136.50-$136 with a close below the latter signaling a possible short-term top.

RSI is in a solid uptrend with resistance at 70 on continued strength. Support is at 60.

The Spider Gold Shares (GLD) traded to a high of $125.69 with near-term resistance at $125.75-$126 and the 50-day moving average.

A close above $127 would be a bullish development. Shaky support is at $125-$124.75 with risk to $124-$123.75 on a move below the latter.

RSI is pushing near-term resistance at 50 with a close above this level leading to a possible run towards 60. Support is at the 40 level.

The percentage of S&P 500 stocks trading above the 50-day moving closed Friday at 53.37% with near-term resistance at 55%-60%.

A close above the latter would be a continued bullish development. Support is at the 50% level.

The percentage of Nasdaq 100 stocks trading above the 200-day moving average is currently at 75.96% and Friday’s high.

Early February resistance is at 76%-78% followed by 80% and January support levels. A close below 70% would be a slightly bearish development.
Existing Position Update

FB remains stable but approaching upper range of the bear call strike. I’m anticipating minor chop from the market over the next few sessions – which should cause price to trade lower – and move lower into range.

AAPL continues to move in our direction. Premium decay continues to progress. If I can gain some value from bear call next few days I will take that opportunity – but only if the premium makes it worthwhile.

I did not want to roll the AMZN because relative strength began rising once again. Will roll when I see market began to congest once again.

Roger Scott
Head Trader

Market Geeks