U.S. markets showed strength throughout the session after geopolitical concerns eased and positive developments concerning TPP emerged. News that President Trump has designated economic adviser Larry Kudlow and Trade Representative Robert Lighthizer to review whether to rejoin the Trans-Pacific Partnership trade accord helped lift market spirits.

Volatility closed below a key level of support with the market at 3-week highs ahead of tomorrow’s earnings reports from a number of financial companies.

The Dow made a push to 24,592 after zooming 1.2% to move within spitting distance of clearing its 50-day moving average. The Nasdaq jumped 1% following its run to 7,166 while closing in on the 7,200 level and its 50-day moving average.

The S&P 500 soared 0.8% after trading north of 2,674 to regain positive territory for the year by a point but a level that failed to hold into the close.

The Russell 2000 rallied 0.7% to extend its winning streak to 4-straight sessions after testing an intraday high of 1,562.

Financials rose 1.8% to pace sector strength while Industrials were higher by 1.4%. Utilities and Real Estate were the leading laggards with the sectors sinking 1.3% and 1.2%, respectively.

Global Economy – European markets rebounded to close higher across the board. Germany’s DAX 30 gained 1% while the Belgium20 and the Stoxx 600 Europe were up 0.7%. France’s CAC 40 added 0.6% and UK’s FTSE 100 was up a point, or 0.02%.

Eurozone February industrial production unexpectedly fell 0.8%, weaker than expectations for a rise of 0.1%.

Asian markets continued to struggle after falling for a 2nd-straight session. China’s Shanghai declined 0.9% while Hong Kong’s Hang Seng and Australia’s S&P/ASX 200 dipped 0.2%. South Korea’s Kospi and Japan’s Nikkei slipped 0.1%.

U.S. Economy

Initial Jobless Claims fell 9,000 to 233,000 for the week ending April 7th, topping expectations for a print of 230,000.

The 4-week average was up to 230,000 from 228,250. Continuing claims bounced 53,000 to 1,871,000 for the March 31st week.

March Import prices were flat, with export prices 0.3% higher.

Market Sentiment – Fed funds futures have pulled back following yesterday’s FOMC minutes. They are still suggesting risk for 4 hikes this year, although the futures are only pricing in a total of 3 tightenings for 2018.

Implied rates are showing about 80% risk for another 25 basis-point rate increase at the June 12th-13th FOMC, while the chances for a third increase this year by December are closing in on 70%.

The iShares 20+ Year Treasury Bond ETF (TLT) traded in negative territory throughout the session with the low tapping $120.41. Upper support at $120.50-$120 held into the closing bell with additional risk to $119.50-$119 on a close below the latter.

Lowered resistance is at $121-$121.50-$122.

Market Analysis – The Russell 3000 Index ($RUA) closed higher for the 3rd time in four sessions after reaching a peak of 1,585. We mentioned the last time we covered $RUA a bullish reversal could occur on continued closes above the 1,580 level with today’s closing falling just shy of this level.

However, key resistance remains at 1,590-1,600 and the 50-day moving average and levels that will come into play on continued strength. Rising support is at 1,570-1,560 with a move below the latter signaling a possible short-term top.

RSI cleared resistance at 50 with continued closes above this level being a bullish development. Support is at 40 with risk to 30 on a close back below this level.

The Spiders S&P Homebuilders ETF (XHB) fell for the 4th time in five sessions after failed attempts to clear its 50-day and 200-day moving averages. The low of $40.02 held support at $40-$39.50.

A close below $39 would be a continued bearish development. Lowered resistance is at $40.50-$41.

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

AAPL remains resilient and with the ascending triangle pattern developing in the broad indices, there is good chance we will see more upside.

BABA remains above our short strike price. Expect more upside over the near term since the low swing last week corresponded to deep oversold price level.

TLT remains flat and with the increased tension in Syria and China we can expect a bit more congestion and sideways action over the next few weeks.

TSLA is weaker but unless the overall stock market breaks the 200 day line again, I doubt we will be visiting those price levels at any time soon.

Roger Scott