U.S. markets showed strength on the open following optimism surrounding continued trade talks with China. The country’s top economic advisor, Liu He, is scheduled to meet with U.S.

Treasury Secretary Mnuchin to close a deal that would ease restrictions for a major Tech company in return for China removing tariffs on U.S. soybeans, pork and ginseng.

The momentum held throughout the session although there was weakness in the small-caps afterwards as the major indexes

The Dow rose 0.3% after making a run to 24,994 to close higher for an 8th-straight session. The S&P 500 gained 0.1% to extend its winning streak to 4-straight while reaching a peak of 2,742.

The Nasdaq closed higher for the 6th-time in seven sessions after adding 0.1% and making an intraday push to 7,458. The Russell 2000 slipped 0.4% after failing its all-time high of 1,615 by just over a point shortly after the open.

Energy and Health Care paced sector winners after rising 0.7% while Materials rose 0.4%.

Real Estate and Utilities led sector laggards after giving back 0.7% and 0.4%, respectively.

Global Economy – European markets settled slightly lower to start the week following developments in Italian politics after two populist parties said they had reached a deal to form a new government.

Germany’s DAX 30 and UK’s FTSE 100 slipped 0.2% while the Stoxx 600 Europe was down a fifth-point, or 0.1%. France’s CAC 40 dipped a point, or 0.02%. The Belgium20 was up a point, or 0.03%.

ECB Board member Villeroy De Galhau said an increase in the ECB’s deposit rate would be at least some quarters, but not years after the end of its asset-purchase program.

Asian markets showed gains while pushing April highs and were led by Hong Kong’s Hang Seng 1.4% surge. Japan’s Nikkei was up 0.5% and China’s Shanghai advanced 0.4%. Australia’s S&P/ASX 200 added 0.3% while South Korea’s Kospi was lower by 0.1%.

There were no major economic news today.

Market Sentiment – St. Louis Fed James Bullard wouldn’t divulge whether there would be a rate hike in June, as he said analysts will have to wait and see.

Regarding the path of policy, he indicated it would depend significantly on what happened to inflation and whether it remained below 2%. He added a small uptick down the road would merely get the rate closer to target.

Bullard said he is not too concerned about higher oil prices generating price pressures, as he believes they now have a more neutral effect on the economy. He went on to say the yield curve inversion is a risk by late-2018 or early 2019, and with that risk, there is no need to be aggressive on raising interest rates. He remains concerned that yield curve inversion could send a negative economic signal.

As far as crypto-currencies, Bullard said that privately issued and public currencies can coexist, but consumers and businesses may not like a non-uniform currency.

He argued that crypto-currencies may be unwittingly pushing in the wrong direction by facilitating market-based exchanges, whereas government backing and stable monetary policy support a currency’s reliability and value.

Cleveland Fed President Mester said the global economy overall is healthy and the outlook is pretty positive. She added the Fed can stay on a gradual upward path of interest rates.

The iShares 20+ Year Treasury Bond ETF (TLT) traded in negative territory throughout the session with the low tapping $118.59. Fresh support at $118.50-$118 held and is back in play.

The index has been in a mini trading range throughout the month with continued closes below the latter being a bearish development. Lower resistance is at $119-$119.50 and the 50-day moving average.

Continued closes above the latter would be a slightly bullish signal.

Market Analysis – The PowerShares QQQ (QQQ) closed up for the 5th-time in 7 sessions after testing an intraday high of $170.82. Early January resistance at $170.50-$171 held with continued closes above the latter being a bullish signal for a possible run towards $172-$174.

The all-time high is at $175.21 from early March. Near-term support is at $169.50-$169 with a move below $168 likely signaling additional weakness and a short-term top.

RSI is pushing March and lower resistance at 65 with continued closes above 70 being a bullish signal.

Support is at 60 with a move below this level likely leading to a further backtest towards 50.

The Materials Select Sector (XLB) closed higher for the 3rd-time in 4 session after trading up to $59.31 shortly after the open. Near-term resistance is at $59.50-$59.75 with continued closes above the $60 level being a slightly bullish development.

Support is at $58.75-$58.50. A close below $58.25-$58 and the 50/200-day moving averages would be a slightly bearish signal.

A death-cross has been avoided, for now, as the 50-day moving average avoided falling below the 200-day moving average.

RSI is pushing mid-April resistance at 60.

Continued closes back above this level would be a bullish development for run towards 70 on continued strength. Support is at 50.

Existing Position Update

Liquidated TSLA.

NVDA appears to be stagnating near the current price level. Plenty of buyers moved in before earnings and are now waiting for momentum that may not come over the near term. Few more days of congestion and price will begin to show loss of momentum.

Expect another position in the near term.

Roger Scott