U.S. markets opened slightly higher but were choppy throughout the first half of action before picking up strong momentum into the afternoon.
The technical picture continues to improve as the broader market cleared and closed above major resistance levels for the first time since mid-April.
Volatility continued to ease as it works its way back towards major levels of support and is showing signs of a possible market breakout to fresh all-time highs.
The Nasdaq surged 1% while tapping an intraday high of 7,344 and clearing the 7,300 level for the first time since mid-April. The Russell 2000 rallied 0.6% after making an intraday push to 1,598 and major resistance at 1,600.
Both indexes are roughly 2% and 3%, respectively, above their 50-day moving averages.
The S&P 500 soared 1% following its run to 2,701 but missed holding the 2,700 level by just over 2 points. The Dow jumped 0.8% after reaching a peak of 24,586 to extend its winning streak to 5-straight sessions.
Both indexes closed above their 50-day moving averages.
Energy led sector strength for a second-straight session after zooming 2% and oil surging back above $70. Financials and Materials were up 1.5% and 1.4%, respectively.
Utilities fell for a second-straight session and were the only sector laggard after giving back 0.7%.
Global Economy – European markets were mostly higher and closed at 3-month peaks following the pop in energy stocks that helped boost overall market sentiment.
UK’s FTSE 100 rose 1.3% and the Stoxx 600 Europe was up 0.6%. France’s CAC 40 and Germany’s DAX 30 gained 0.2%. The Belgium20 was down 0.5%.
France March Industrial Production slipped 0.4%, missing forecasts for a rise of 0.4%. March manufacturing production climbed 0.1%, well below expectations of 0.9%.
UK April BRC sales dropped 4.2% year-over-year, much weaker than expectations for a decline of 0.8%.
Asian markets settled mixed with gains and losses limited. Japan’s Nikkei fell 0.4% while South Korea’s Kospi declined 0.2% and China’s Shanghai dipped 0.1%.
Hong Kong’s Hang Seng rose 0.4% and Australia’s S&P/ASX 200 was higher by 0.3%.
Japan March labor cash earnings rose 2.1% year-over-year, stronger than forecasts of 1%. March real cash earnings were up 0.8% year-over-year, topping expectations for a drop of 0.5%.
MBA Mortgage Applications slipped 0.4% for the week ending May 4th.
Producer Price Index for April rose 0.1% from the prior month, just below forecasts for an increase of 0.2%. Excluding food and energy, the core measure was up 0.2%, as forecast.
Wholesale Trade sales rose 0.3% in March, as did inventories.
Atlanta Fed’s Q2 GDPNow estimate was unchanged at 4%, still well above the 3.1% consensus. The nowcasts of Q2 real consumer spending growth and Q2 real private fixed investment growth inched down from 3.1% and 5.6%, respectively, to 3% and 5.4%. The nowcast of the contribution of inventory investment to Q2 real GDP growth increased from 0.67% to 0.78%.
Market Sentiment – The iShares 20+ Year Treasury Bond ETF (TLT) closed in the red for a 3rd-straight session after trading down to $117.98. Fresh support at $118-$117.75 is back in play with a close below $117.50 being a continued bearish development.
Lowered resistance is at $118.25-$118.50 followed by $119-$119.25 and the 50-day moving average.
Market Analysis – The Spider Small-Cap 600 ETF (SLY) made a run to a lifetime high of $139.82 intraday with fresh resistance at $139.50-$140 holding.
The all-time high from late January tapped $139.70. Continued closes above $140 could lead to a breakout towards $142.50-$143 depending on momentum and possible short-covering.
We have been highlighting the triple-top formation at $139-$140 since mid-April and the peaks from mid-March and mid-January.
We also covered the backtest towards the 50-day moving average and have been looking for this rebound, and possible short-covering, if momentum returned and can hold.
Rising support at $139-$138.50 with a close back below $138 possible signaling another short-term top.
RSI is trying to clear and hold April and March resistance at 60-65. Continued closes above the latter would signal a possible push towards 70 or better. A move back below 60-55 would be a slightly bearish signal.
The Technology Select Sector Spiders (XLK) reached a peak of $69.08 with late February resistance at $69-$69.50 back in the mix. Continued closes above $70 would be a very bullish signal for a possible blue-sky breakout towards $72-72.50.
The mid-March all-time high hit $71.34. Rising support is at $68.50-$68.
A breakout above a double-top formation at the $69 level occurred in mid-March with a breakdown coming afterwards below the 50-day moving average.
A triple-top breakout would be in play on continued closes above $70.
RSI is back in an uptrend with near-term resistance at 65 and early March highs.
A move above the latter would signal additional strength and a possible push towards 70-75. Support is at 60-55.
Existing Position Update
Liquidated PANW with the intend to roll after price increases a bit more.
Watching NVDA and may want to liquidate before closing tomorrow – depending on the movement that occurs during market hours.
TSLA remaining remarkably stable – especially with all the news coming out daily.
Expect another position before end of the week.