U.S. markets showed overall strength for the 5th time in 6 sessions before a mixed finish with the overall market and Tech continuing their run to fresh 2019 highs.
The blue-chips continue to make higher highs and the small-caps are making a move out of a 5-session trading range.
The action was bullish although slightly overbought levels are starting to come into play.
Wednesday’s Fed minutes and comments afterwards could provide some near-term fireworks with volatility currently favoring lower market lows.
The Nasdaq edged up 0.1% after trading to a high of 7,767.
Fresh and lower resistance at 7,750-7,800 was cleared but held on the 2nd-straight close above the 7,700 level.
The S&P 500 slipped a third-point, or 0.01%, despite the intraday push to 2,852. Lower resistance at 2,850-2,875 was cleared but held following the fresh 2019 high.
The Dow declined 0.1% following the intraday run to 26,109.
Lower resistance at 26,000-26,250 held for the 3rd-straight session with the blue-chips snapping a 4-session winning streak on the slightly lower close.
The Russell 2000 dropped 0.6% after tapping a morning high of 1,570.
Lower resistance at 1,570-1,585 held before the pullback to 1,552 and close above the 1,550 level.
Healthcare led sector strength after adding 0.8%.
Consumer Discretionary was up 0.5% while Technology and Communication Services advanced 0.2% to round our the winners.
Utilities led sector weakness with a decline of 1.1%. Financials fell 0.8% while Industrials dropped 0.4%.
Global Economy – European markets were higher across the board despite British lawmakers struggling to overcome procedural and political hurdles for a Brexit deal.
Germany’s DAX 30 jumped 1.1% and the Belgium20 rallied 0.8%. The Stoxx 600 Europe advanced 0.6% and UK’s FTSE 100 rose 0.3%. France’s CAC 40 was up 0.2%.
Asian markets were mostly weak after the meeting minutes from the Reserve Bank of Australia noted that trade tensions remained a continued source of uncertainty for the global outlook.
China’s Shanghai slipped 0.2% while South Korea’s Kospi, Japan’s Nikkei and Australia’s S&P/ASX 200 dipped 0.1%. Hong Kong’s Hang Seng added 0.2%.
Redbook Store Sales were up 4.9% for the year in the week ending March 16th.
Factory Orders rose 0.1% in January, topping expectations for a flat reading. Durable orders were revised to a 0.3% gain versus the 0.4% increase in the Advance report.
Transportation orders increased another 1.2% versus the prior 3.2% jump. Excluding transportation, orders dipped 0.2% from -0.5%.
Nondefense capital goods orders excluding aircraft bounced 0.8%, unwinding the 0.8% decline from December. Shipments slipped 0.4% after declining -0.2% previously.
Nondefense capital goods shipments excluding aircraft also increased 0.8% from the prior 0.1% gain.
Inventories climbed 0.5% from 0.1% while the inventory-shipment ratio edged up to 1.36 from 1.35.
Market Sentimen – Expectations are the central bank to hold interest rates at the current 2.25%-2.5% levels with most economists foreseeing possibly one interest rate hike later this year.
Wall Street also expects the Fed to reduce its forecasts for GDP growth and inflation for 2019 and 2020. An update on when the Fed is likely to announce at what point this year they plan to end the balance sheet reduction.
The iShares 20+ Year Treasury Bond ETF (TLT) was weak for the 2nd-straight session following the backtest to $120.89.
Near-term support at $121.50-$121 was breached on the close below the former.
A move below $120.75 and the 50-day moving average would be a slightly bearish development.
Resistance remains at $122-$122.50 with a close above the latter signaling higher highs.
Market Analysis – The Russell 2000 ETF (IWM) closed lower for just the 2nd time in 7 sessions despite making an intraday run to $156.53.
Resistance at $156.75-$157.25 and the 200-day moving average was challenged but held. Continued closes back above $157.50 could lead to a quick trip towards $158-$160 with the latter representing the late February peak.
Near-term and upper support at $155-$154.50 failed to hold on the late day fade to $154.57. A close below the latter opens up risk towards $153-$152.50.
The 50-day moving average is on track to clear the 200-day moving average this month, or by early April. This would form a golden cross and is typically a bullish technical setup for higher highs.
RSI is in a slight downtrend after failing resistance at 60.
A move above this level would be a bullish signal for a possible run towards 65-70 with the latter representing late February support. Current support is at 50.
The iShares PHLX Semiconductor ETF (SOXX) traded to a fresh 2019 high after reaching an intraday peak of $192.19.
Late August and upper resistance at $190.50-$191 was challenged for the 3rd-straight session and cleared. These levels will now try and hold as short-term support.
Current resistance is at $192.50-$103. Continued closes above the latter would signal additional momentum and setup a possible push towards $194.50-$195 over the near-term.
The 50-day moving average has crossed above the 200-day moving average following Tuesday’s action to form a golden cross.
RSI is back in a slight uptrend with resistance at 70. A close above this level would be a bullish signal with possible strength towards 75-80 and January 2018 levels.
Support is at 65-60 with a move below the latter signaling additional weakness.
All the best,
Roger Scott.