U.S. markets traded in a tight range on Thursday as the Trump-Kim summit ended abruptly when the two leaders failed to reach a deal. The failed meeting had little impact on the major indexes as they traded in tight ranges.

A better-than-expected GDP number helped keep weekly lower lows from coming into play and near-term support levels have been holding throughout the week.

However, the major indexes are showing losses for the week and will need another rebound Friday to keep a 7-week winning streak intact.

The Russell 2000 remains in a 6-session trading range after slipping 0.4% and testing an intraday low of 1,571.

Near-term and upper support at 1,575-1,560 was breached but held with a close below 1,550 being a bearish development.

The Nasdaq gave back 0.3% following the morning backtest to 7,516. Near-term and upper support at 7,525-7,475 and the 200-day moving average held into the close with a move below the latter being a bearish signal for additional weakness.

The S&P 500 also declined 0.3% after testing a second half low of 2,782.

Current and upper support at 2,775-2,750 held for the 2nd-straight session with a close below the latter and the 200-day moving average being a bearish signal.

The Dow extended its losing streak to 3-straight sessions after dropping 0.3% on the late day fade to 25,896. Fresh and upper support at 25,750-25,500 easily held with a close below the latter signaling a near-term top.

Utilities and Consumer Staples led sector strength with gains of 0.6% and 0.5%, respectively.

Real Estate and Communication Services added 0.3% and 0.1% to round out the winners.

Materials and Energy were the weakest sectors after giving back 1.2% and 1%.

Consumer Discretionary was down 0.5%.

Global Economy – European markets closed mixed after new politicians will be given an opportunity to push for a second referendum on the U.K’s membership of the European trading bloc, bringing the country closer than ever to a rerun of the 2016 poll.

The Belgium20, France’s CAC 40 and Germany’s DAX 30 rose 0.3% while the Stoxx 600 Europe edged up 0.1%. UK’s FTSE 100 was lower by 0.5%.

Asian markets settled mostly lower following disappointing economic news out of China and a disappointing outcome in peace talks between the U.S. and North Korea.

South Korea’s Kospi sank 1.8% and Japan’s Nikkei fell 0.8%. China’s Shanghai and Hong Kong’s Hang Seng were lower by 0.5%. Australia’s S&P/ASX 200 was up 0.3%.

China’s manufacturing purchasing managers’ index for February decreased to 49.2 from 49.5 in January. It was the lowest reading since March 2016 and and missed forecasts of 49.4.

China non-manufacturing PMI fell to 54.3 in February from January’s 54.7.

Initial Jobless Claims rose 8,000 to 225,000 versus expectations for a print of 218,000. This brought the 4-week moving average down to 229,000 from 236,000.

Continuing claims bounced 79,000 to 1,805,000 after falling 54,000 to 1,726,000 previously.

GDP posted a 2.6% rate of growth, decelerating from 3.4% in Q3, but topping expectations of 2.3%. GDP is up 3.1% year-over-year. Business fixed investment climbed 3.9% from 1.1%, with non-residential investment up 6.2% from 2.5%, and residential at -3.5% from -3.6%.

Government spending was up 0.4% from 2.6%, with Federal at 1.6% from 3.5%. Inventories added $7.3 billion after the prior quarter’s $126.6 billion.

Net exports subtracted $13.5 billion and the GDP chain price index was steady at 1.8%. The PCE chain price index slipped to 1.5% from 1.6%, with the core rate rising to 1.7% from 1.6%.

Chicago PMI Index checked in at 64.7, well above estimates of 56.1. The 3-month moving average edged up to 61.7 from 61.3.

February Kansas City Fed Manufacturing Index Level came in at 1.

Market Sentiment – Fed VC Clarida said monetary policy needs to be especially data dependent now that the funds rate is in the range of what policymakers view as the long run neutral level.

He reiterated the Fed can be patient and he also said that now that the policy regime has been decided, the floor system, the Committee can now decide on the appropriate timing and pace for concluding the balance sheet drawdown.

Clarida expects solid, though somewhat slower growth in 2019, with global slowing as well, especially in China and Europe.

Atlanta Fed Raphael Bostic believes the FOMC should try to rely on traditional policy tools, though he said he is fully willing to deploy whatever tools analysts have to sustain growth.

He noted a widening technological skills gap to perform new jobs.

Philadelphia Fed Patrick Harker remains in a wait-and-see mode, with patience a virtue. He still believes one more hike this year, and one more in 2020 are appropriate.

His forecast is for a bit above 2% for this year, returning to trend of around 2% some time in 2020.

Harker said inflation should run slightly higher than 2% in 2019 and 2020. He is watching core inflation and the trajectory of prices and said analysts are not seeing significant upward pressure.

He went on to add it’s not on an accelerated path; if anything, it’s edging slightly downward. He said if that scenario changes, the data would guide my views.

The iShares 20+ Year Treasury Bond ETF (TLT) fell for the 2nd-straight session after testing a low of $119.77.

Fresh and upper support at $120-$119.50 was breached but held with a close below $119 signaling lower lows.

Near-term and lowered resistance is at $120.50-$121 and the 50-day moving average.

Market Analysis – The Invesco QQQ Trust (QQQ) has been in mini trading range for 4-sessions following the pullback to $172.70. Near-term support at $172.50-$172 held with a move below $171.50 and the 200-day moving average being a slightly bearish development.

Near-term resistance is at $174-$174.50. A close above $175 would be a more bullish signal with upside momentum towards $177-$177.50 and mid-October hurdles.

RSI is in a slight downtrend with support at 60. There is risk towards 55-50 on a move below this level with the latter holding throughout 2019.

August and resistance from a couple of weeks ago is at 70. A close above this level would signal additional strength towards 75-80 and January 2018 peaks.

The Materials Select Sector (XLB) closed in the red for the 3rd-straight session trading to a low of $54.93. Crucial and upper support at $55-$54.50 was breached but held into the closing bell.

A move below $54 would be a slightly bearish signal for a continued backtest towards $53-$52.50 and a 50-day moving average that is in a nice uptrend.

Lowered and near-term resistance is at $55.50-$56 and the 200-day moving average.

Continued closes back above the latter $56.25 would be a more bullish signal for higher highs.

RSI is in a slight downtrend with support at 55-50.

A move below the latter and a level that has been holding since early January would being a slightly bearish signal for additional weakness. Resistance is at 60.

All the best,
Roger Scott.