U.S. markets showed continued weakness but rebounded off the midday lows to settle mostly higher despite some sharp remarks from Commerce Secretary Wilbur Ross on China trade negotiations.

Concerns over slower economic growth on higher inflation along with the start of the FOMC meeting also played a role in the intraday weakness.

However, the two-day meeting is expected to be a nonevent with Wall Street not anticipating any rate action, nor any significant change in the policy statement.

The Nasdaq gained 0.9% despite testing a low of 7,036 while holding crucial support at the 7,000 level for the 7th-straight session. The Russell 2000 was higher by 0.6% following the backtest to 1,527 but closed back above its 50-day moving average.

The S&P 500 gained 0.3% after trading down to 2,625 and coming within a dozen points of breaching its 200-day moving average.

The Dow dropped 0.3% after tumbling to a session low of 23,808 before rebounding just above its 200-day moving average to hold the 24,000 level for the 5th-straight session.

Technology and Real Estate showed the most sector strength after rising 1.3% and 0.7%, respectively. Consumer Staples and Energy paced the laggards after giving back 0.9% and 0.6% while Materials were down 0.5%.

Global Economy – European markets were mixed with the Stoxx 600 Europe slipping 0.1% while UK’s FTSE 100 was up 0.2%. Germany’s DAX 30, France’s CAC 40 and the Belgium20 were closed for the May Day holiday.

UK April Markit manufacturing PMI fell 1 to 53.9, weaker than expectations for a dip of 0.3 to 54.8.

UK March net consumer credit rose 0.3 billion pounds, weaker than expectations of 1.4 billion pounds.

Asian markets settled higher in light trading as Hong Kong, China, and South Korea were also closed for the holiday. Australia’s S&P/ASX 200 added 0.5% while Japan’s Nikkei climbed 0.2%.

The Japan April Nikkei manufacturing PMI was revised upward to 53.8 from the previously reported 53.3.

Japan April vehicle sales rose 0.5% year-over-year, representing the first increase in seven months.

Redbook Store Sales were up 3.5% for the year in the week ending April 28th.

PMI Manufacturing Index for April was in-line with the flash reading at 56.5.

ISM Manufacturing Index fell 2 points to 57.3 in April, which was below expectations for a print of 58.5.

March Construction Spending sank 1.7%, missing forecasts for a rise of 0.5%.

In trade news, the White House announced it has permanently exempted Argentina, Brazil, and Australia from the steel and aluminum tariffs and extended the exemption by 30 days for the EU, Canada, and Mexico.

Market Sentiment – The iShares 20+ Year Treasury Bond ETF (TLT) closed lower after trading down to $118.23 to snap a 3-session win streak. Near-term support at $118.25-$118 held with a close below the latter being a slightly bearish signal.

Resistance remains at $119-$119.25 and the 50-day moving average.

Market Analysis – The Spider Small-Cap 600 ETF (SLY) closed back above its 50-day moving average with today’s high reaching $135.57. A triple-top formation at $139-$140 occurred in mid-April and is typically followed by a backtest towards the 50-day moving average.

Near-term resistance is at $136-$136.50 with continued closes back above $137 being a slightly bullish development. However, support at $134-$133.50 was breached intraday with the technical picture likely to worsen on a close below $133.

RSI is trying to clear April resistance at 50-55. A close below 45-40 and March support levels would be a bearish signal for a continued backtest towards 30 and February lows.

The Dow Jones Transportation Average ($TRAN) has been in a relatively tight range between 10,400-10,600 the past six trading sessions. These levels have been slightly stretched to the downside and upside in five of the sessions with Tuesday’s low tapping 10,293.

Support at 10,450-10,400 and the 50-day moving average has been shaky following back-to-back closes below the latter. A close below 10,300 would be a bearish signal with risk towards the 10,000 level and the 200-day moving average.

The 200-day MA has been holding since September 2017 with the early April lows at 10,084 and 10,036.

Resistance is at 10,500-10,550 with continued closes above 10,600 being a slightly bullish development. The 50-day moving average has leveled out following a bearish downtrend from mid-March thru mid-April.

RSI is trying to hold near-term support at 45 with risk to 40 and April lows on a close below this level. Resistance is at 50.

Existing Position Update

TSLA holding steady and seeing more decline on the put side.

PANW has been extremely stable over the last few weeks. Expect more decay in the near term.

AAPL has earnings coming out after the closing bell and price appears to be moving upwards ahead of the numbers.

I should have another position before the end of the week.

Looking for good opportunities on the bear call side at this time. Need to wait for AAPL earnings to come out – they will set tone for next few sessions, unless global turmoil strikes again.

Roger Scott