U.S. markets were choppy throughout Thursday’s session as concerns over trade talks, rising interest rates, and higher oil prices worried Wall Street.

The T-note yield tapped 3.12% intraday and the bond yield eyed 3.25% before pulling back while crude oil cleared $72 barrel. Volatility was relatively calm which help keep losses in check with the small-caps showing continued strength.

The Russell 2000 was higher for a 2nd-straight session after climbing 0.6% while tapping a fresh all-time high of 1,627. The Nasdaq gave back 0.2% despite making a morning push to 7,425 while closing below the 7,400 for a 3rd-straight session.

The S&P 500 slipped 0.1% following a backtest to 2,711 but has been holding the 2,700 for 6-straight sessions. The Dow closed lower for just the 2nd time in 11 sessions after declining 0.2% while bottoming at 24,639 intraday.

Energy zoomed 1.5% and was the sector standout. Industrials and Consumer Staples were up 0.4% and 0.3%, respectively. Utilities fell 0.8% to pace sector laggards while Technology and Real Estate dropped 0.5%.

Global Economy – European markets closed higher across the board as political risks in Italy eased when the anti-establishment Five Star Movement dropped its request for a 250 billion euro write-off from the ECB.

The Belgium20 rallied 1.1% while France’s CAC 40 surged 1%. Germany’s DAX 30 jumped 0.9% while the Stoxx 600 Europe and UK’s FTSE 100 rose 0.7%

Eurozone April new car registrations rose 9.6% year-over-year to 1,306,000. Year-to-date new car registrations were up 2.7% to 5,478,000.

Asian markets settled mostly lower with Japan’s Nikkei bucking the trend after gaining 0.5%. South Korea’s Kospi, Hong Kong’s Hang Seng and China’s Shanghai fell 0.5% while Australia’s S&P/ASX 200 slipped 0.2%.

China April foreign direct investment fell 1.1% year-over-year, the first decline in 4 months.

Japan March core machine orders dropped 3.9%, weaker than expectations for a decline of 3%.

E-Commerce Retails Sales for 1Q 2018 was $123.7 billion, an increase of 3.9% from 4Q 20 17.

Initial Jobless Claims rose 11,000 to 222,000 in the week ending May 12th. The 4-week moving average slipped to 213,250 from 216,000. Continuing claims dropped 87,000 to 1,707,000 in the May 5th week after bouncing 34,000 to 1,794,000 previously.

The Philadelphia Fed Business Outlook Survey climbed 11.2 points to a 34.4 reading, topping expectations for a print of 21. The employment component increased to 30.2 from 27.1, with the workweek at 34.4 from 21.6.

New orders surged to 40.6 from 18.4. Prices paid dipped to 52.6 from 56.4, though prices received rose to 36.4 from 29.8.

The 6-month business conditions index fell to 38.7 from 40.7, but the employment index improved to 42.8 from 34.6, with new orders rising to 40.3 from 37.2, while prices paid slid to 63.4 from 66.8 and prices received dropped to 33.6 from 47.9.

Leading Indicators rose 0.4% to 109.4 in April, the 7th consecutive monthly gain to another record level.

The average workweek and the interest rate spread were the biggest positive contributors at 0.13% each, followed by ISM new orders, while stock prices slipped 0.07% and building permits dipped 0.05% and were the only two decliners.

Market Sentiment – Minneapolis Fed Neel Kashkari said low wage growth is a big conundrum.

He went on to add that one theory is that there is more slack in the labor market and another is that wages may be slow growing because businesses may have more bargaining power than labor. He also does not think that there is a national bubble in housing.

Dallas Fed Kaplan said the U.S. economy is at or past full employment in a Q&A session at a Chamber of Commerce meeting.

The iShares 20+ Year Treasury Bond ETF (TLT) extended its losing streak to 4-straight sessions after testing an intraday low of $116.09. Fresh support at $116.25-$115.75 was breached with a close below the latter leading to fresh 52-week lows.

Lowered resistance is at $116.75-$117.25.

Market Analysis – The Spider Small-Cap 600 ETF (SLY) was up for the 9th-time in 10 sessions after trading to an all-time intraday high of $142.76. We mentioned a few weeks ago continued closes above $140 could lead to a breakout towards fresh resistance at $142.50-$143 depending on momentum and possible short-covering.

Continued closes above the latter could lead to a possible push towards $144.50-$145.

We highlighted the triple-top formation at $139-$140 in mid-April and the peaks from mid-March and mid-January.

While current support is at $142-$141.50, these levels will serve as much broader support on a selloff.

RSI is trying to clear July resistance at 70. Continued closes above the latter would be a bullish signal. A move back below 65-60 would be a slightly bearish signal.

The Spider Gold Shares (GLD) snapped a 4-session slide despite making a backtest to $122.04. Late November support at $122-$121.50 held with continued closes below the latter leading to a retest near the $120 level.

We mentioned in late April a double-top formation near the $129 level and major resistance from late January had formed and usually leads to lower lows. Current resistance is at $122.50-$123.

RSI is trying to hold support and December lows near 30.

A move below this level would be a continued bearish development. Resistance is at 35-40.

Existing Position Update

NVDA remains under fair value – expect price to increase slightly or remain near the current range. I’m not expecting price to make new highs over the near term.

NFLX was filled at $.68 – most got filled within that price range. I’m expecting the overall market to stagnate next few sessions, which will cause premium to decay for a bit.

Should have another position before end of next week.

Roger Scott