U.S. markets showed strength throughout Tuesday’s session to close higher as the start of the FOMC meeting begins.
Federal Reserve Chairman Jerome Powell will preside over his first official Federal Open Market Committee meeting with a sixth rate hike by the FOMC since it started to normalize rates in December 2015 widely expected.
The Dow gained 0.5% after testing a high at 24,803 to close back above its 100-day moving average. The Nasdaq added 0.3% after trading up to 7,380 intraday while failing near-term resistance at the 7,400 level.
The S&P 500 climbed 0.2% after making a run to 2,724 but remains trapped between its 50/100-day moving averages. The Russell 2000 slipped less than a quarter-point, or 0.01% after trading down to 1,566 but remains above 50-day moving average.
Energy and Consumer Discretionary led sector strength after advancing 0.9% and 0.6%, respectively. Utilities and Consumer Staples paced sector laggards after falling 0.5% and 0.3%.
Global Economy – European markets were higher across the board despite weaker-than-expected economic news. Germany’s DAX 30 was higher by 0.7% and France’s CAC 40 rose 0.6%. The Stoxx Europe was up 0.5% and the Belgium20 advanced 0.4%. UK’s FTSE 100 gained 0.3%.
German March ZEW expectations of economic growth fell 12.7 to of 5.1, weaker than expectations for a drop of 4.8.
German February PPI slipped 0.1% month-over-month and was up 1.8% year-over-year, weaker than expectations for a rise of 0.1% and +2%, respectively.
UK February CPI rose 0.4% month-over-month and 2.7% year-over-year, below expectations of 0.5% and 2.8%. February core CPI rose 2.4% year-over-year, weaker than expectations of 2.5%.
Asian markets were mixed for a second-straight session. South Korea’s Kospi was higher by 0.5% and China’s Shanghai was up 0.3%. Hong Kong’s Hang Seng climbed 0.1%. Japan’s Nikkei declined 0.5% and Australia’s S&P/ASX 200 fell 0.4%.
Redbook was up 3.2% year-over-year for the week ending 3/17.
Market Sentiment – The iShares 20+ Year Treasury Bond ETF (TLT) fell for a third-straight session with today’s low reaching $118.83. Fresh support at $118.75-$118.50 with a close below the latter being a continued bearish development.
Lowered resistance is at $119-$119.50.
Market Analysis – The Spiders Dow Jones Industrial Average ETF (DIA) closed in positive territory for the third time in four sessions after reaching a peak of $247.85. The failure to make higher highs remains a slightly bearish signal.
Near-term resistance is at $248-$248.50 with additional hurdles at $249.50-$250. Shaky support is at $246.50-$246 followed by $245-$244.50.
RSI has been struggling with near-term resistance at 50 with a close below this level being a slightly bullish signal. Important levels of support are at 45-40 with a close below the latter confirming additional weakness.
The Spiders S&P Homebuilders ETF (XHB) fell for the fourth time in five sessions with today’s low tapping $40.93. Support at $41-$40.75 and the 200-day moving average held with a close below the latter being a continued bearish development.
The February double bottom at the $40 level and this month’s lows near $39.50 would be in play, if breached. The 50-day moving average is also remains a downtrend.
Lowered resistance is at $41.25-$41.50.
RSI is trying to hold near-term support at the 40 area with risk to 30 and February and March lows on a close back below this level. Resistance is at 45-50.
Existing Position Update
Rolled over TSLA and expect price to regain some momentum to the upside over the near term.
Stock has been beaten down and is now approaching medium term resistance level. The premium taken from the new spread should cover the loss on the last spread and give us a bit more upside as well.
FB is lower but with few weeks left till expiration I’m not overly concerned with current price action. I expect price to rise over the next few sessions and move back into middle range.
I’m looking at two positions right now and I’m going to initiate both before the end of the week.
Short term volatility levels are near threshold 20 level ripe for premium selling opportunities.
I wanted to wait till we get a bit closer to FMOC release – since that causes increased uncertainty and prices to spike over the near term.