U.S. markets closed lower across the board for the first time in 8 sessions after showing strength on the open. The weakness came in second hour of trading as the news cycle was dominated by the firing of Rex Tillerson as Secretary of State.

It was a surprise to him and the market as President Trump nominated Mike Pompeo, the current director of the Central Intelligence Agency, as his replacement.

The Nasdaq sank 1% after trading to an all-time intraday high of 7,634 on the open before holding the 7,500 level into the closing bell. The Dow dropped 0.7% and was able to hold 25,000 after slipping below this level late in the session.

The Russell 2000 fell 0.6% to close back below the 1,600 level.

The S&P 500 cleared 2,800 by a point before giving back 0.6% but remains above its 50-day moving average.

Real Estate was up 0.3% while Utilities and Health Care rose 0.2% and 0.1%, respectively, and were the only sectors that closed higher. Technology and Financials led sector laggards after falling 1.1% and 1%.

Global Economy – European markets closed lower as the euro and the British pound leapt against the dollar after a round of tame inflation data. Germany’s DAX 30 sank 1.6% while the Stoxx Europe 600 and UK’s FTSE 100 tumbled 1%. The Belgium20 fell 0.8% and France’s CAC 40 gave back 0.6%.

The OECD raised its global 2018 GDP forecast to 3.9% from a November estimate of 3.7%, the strongest in 7 years. However, they warned trade protectionism remains a key risk that would negatively affect confidence, investment and jobs.

Asian markets were mixed ahead of the U.S. reading on inflation, which is likely to give some idea about whether the Federal Reserve will accelerate its pace of interest-rate increases. Japan’s Nikkei rose 0.7% and South Korea’s Kospi added 0.4%. Hong Kong’s Hang Seng was up 7 points, or 0.02%.

China’s Shanghai was down 0.5% and Australia’s S&P/ASX 200 dropped 0.4%.

Japan February PPI was unchanged month-over-month and 2.5% year-over-year, slightly weaker than expectations of 0.2% and 2.5%, respectively.

NFIB Small Business Optimism Index for February came in at 107.6, up 0.7 from the previous month and its second highest of all time.

Consumer Price Index matched expectations, as both the headline and core rates rose 0.2% compared to last month. The headline CPI was up 2.2% from last February, while the core CPI was up 1.8% year-over-year.

Market Sentiment – The iShares 20+ Year Treasury Bond ETF (TLT) closed higher for a second-straight session after trading up to $119.37 ahead of the closing bell.

Resistance at $119.50-$120 held with continued closed above the latter being a bullish signal. Support is trying to move up to $118.50-$118.

Market Analysis – The Spider S&P 500 ETF (SPY) made a run to $280.41 at the start of trading with near-term resistance is at $280-$280.50 holding. This area represents prior support from early February with a continued closes above the latter signaling a possible return to all-time highs.

The fade to $276.03 held support at $276 with a close below this level getting $274.25-$274 and the 50-day moving average in play.

RSI is trying to clear near-term resistance at 60 with continued closes above this level keeping 70 in the mix. Support is at 50.

Bitcoin Investment Trust (GBTC) traded down to $14.52 with near-term support is at $14.50-$14 holding. A close below the latter could signal additional weakness towards $13.50-$12.50.

Resistance is at $15-$15.50. The 50-day moving average remains in a downtrend and is on track to close below the 200-day moving average in the coming weeks.

This would be a bearish development.

RSI is trying to hold support at 40 with risk to the 30 level and the February lows. Resistance is at 45-50.

All the best,
Roger Scott