U.S. markets traded lower throughout the session as the latest round of earnings failed to extend the recent rally. However, the major indexes rebounded off their lows into the close following news President Donald Trump had been told he wasn’t a target of special counsel Robert Mueller’s probe.

While this had already been reported earlier this month, the renewed news seemed to lessen some of the political uncertainty swirling around market.

The Nasdaq gave back 0.8% after trading to a low of 7,215 but was able to hold the 7,200 level for the third-straight session. The S&P 500 was lower by 0.6% following the backtest to 2,681 but held its 50-day moving average into the closing bell.

The Russell 2000 fell 0.5% after testing a low 1,569 but remains 2% above its 50-day moving average. The Dow slipped 0.3% despite showing some strength after the open with the afternoon low reaching 24,557.

The blue-chips are back in negative territory for the year but held their 50-day moving average.

Financials surged 1.5% and Energy was up 0.1% and were the only sectors to show strength. Consumer Staples got clobbered after sinking 2.9% while Real Estate tumbled 1.7% to pace sector laggards.

Global Economy – European markets were mostly higher for a third-straight session to close at 10-week peaks. France’s CAC 40 and UK’s FTSE 100 added 0.2% while Germany’s DAX 30 slipped 0.2%.

The Belgium20 climbed a point, or 0.03% and the Stoxx 600 Europe was up a tenth-point, or 0.02%.

UK Mar retail sales ex-auto fuel fell 0.5% month-over-month and rose 1.1% year-over-year, weaker than expectations for a drop of 0.4% and 1.4%, respectively.

March retail sales including auto fuel fell 1.2% month-over-month and was up 1.1% year-over-year, weaker than expectations for a decline of 0.6% and 1.9%, respectively.

Asian markets showed continued strength as trade tensions eased after U.S. President Trump and Japanese Prime Minister Abe agreed to work closely on bilateral trade.

Hong Kong’s Hang Seng jumped 1.4% and China’s Shanghai soared 0.9%. Australia’s S&P/ASX 200 and South Korea’s Kospi were higher by 0.3% while Japan’s Nikkei gained 0.2%.

Initial Claims dipped 1,000 to 232,000 in the week ending April 14th, versus expectations of 230,000. This brought the 4-week moving average to 231,250 from 230,000. Continuing claims declined 15,00p to 1,863k,000 in the April 7th week.

Philadelphia Fed Business Outlook Survey edged up 0.9 points to 23.2 in April, topping forecasts for a print of 20.1.

Leading Indicators rose 0.3% to a new record high (dating back to 1959) of 109 in March, matching expectations.

Market Sentiment – Boston Fed President Rosengren said the capacity of the U.S. to respond to an economic or financial shock has been diminishing as historically low interest rates mean conventional monetary policy response will be limited and unconventional tools may encounter resistance.

Fed Governor Brainard warned on growing pro-cyclical pressures, such as rising asset prices and leverage, though she said it was too early in the economic cycle to revisit calibration of core capital and liquidity requirements for large banks.

That said, she felt it may be appropriate to require banks to build a counter-cyclical capital buffer.

The iShares 20+ Year Treasury Bond ETF (TLT) closed lower for the second-straight session after trading down to $118.81. Support at $119.50-$119 and the 50-day moving average was breached with the latter holding into the close.

There is risk to $118-117.50 on a close below $119. Lowered resistance is at $119.75-$120.25.

Market Analysis – The Russell 2000 ETF (IWM) traded to a low of $155.88 to snap a 3-session win streak. Support at $155.50-$155 held with risk to $153.50-$153 and the 50-day moving average on a close below the latter.

The technical setup has improved with the major moving averages back in an uptrend. Near-term resistance is at $156.50-$157 with a close back above $157.50 being a bullish signal.

RSI failed resistance at 60 with continued closes above this level leading to a possible push towards 65-70. Support is at 50-45 on continued weakness.

The Utilities Select Spider (XLU) declined for the second-straight session following the backtest to $50.35. Support at $50.50-$50 held with risk to $49.50 and the 50-day moving average on a close below the latter.

A close below $49 would signal a short-term top. Near-term resistance is at $51-$51.50 with additional hurdles at $52 and the 200-day moving average.

RSI failed March and early April resistance at 60 and is back in a downtrend. Support is at 50.

Existing Position Update

TSLA is higher causing our position to gain more balance – and cause the put premium to decline even further.

AAPL is weaker but still in our safety zone while options decay.

PANW is showing very little sign of stress or correlation with the broader market. Expect more congestion and slight upside next few sessions, if stocks begin trading higher.

Expect another position early next week.

Roger Scott