U.S. markets closed lower for a second-straight session following another choppy session. There was little news to account for the volatility which stayed elevated, though portfolio managers may be positioning themselves ahead of the quarterly close.

There could be continued market gyrations on lighter volume Thursday as the holiday shortened week wraps up with the market closed for Good Friday.

The Nasdaq declined 0.9% after bottoming at 6,901 intraday to close back below the 7,000 level.

The S&P 500 slipped 0.3% after testing an intraday low of 2,601 while holding the 2,600 level for a third-straight session.

The Dow slipped 9 points, or 0.04%, despite trading to an intraday high of 24,092 while closing below the 24,000 level for the fourth time in five sessions.

The Russell 2000 lost a half-point, or 0.04%, after trading down to 1,505 while holding the 1,500 level for the second-straight session.

Real Estate and Consumer Staples rose 1.8% and 1.4% to lead sector strength. Health Care gained 0.5%.

Energy and Materials fell 2% and 1.3%, respectively, while Consumer Discretionary declined 1.2% to pace sector laggards.

Global Economy – European markets erased early losses to settle mostly higher on Wednesday. The Belgium20 rose 0.7% and UK’s FTSE 100 gained 0.6%. The Stoxx Europe was up 0.5% and France’s CAC 40 added 0.3%. Germany’s DAX 30 gave back 0.3%.

UK March CBI retailing reported sales fell 16 to a 5-month low of -8, weaker than expectations of -1 to 7.

German April GfK consumer confidence unexpectedly rose 0.1 to 10.9, stronger than expectations for a dip of 0.1 to 10.7.

Asian markets settled lower across the board with Hong Kong’s Hang Seng taking the hardest hit after sinking 2.5%.

China’s Shanghai was lower by 1.4% while Japan’s Nikkei and South Korea’s Kospi tumbled 1.3%. Australia’s S&P/ASX 200 declined 0.7%.

MBA Mortgage Applications were up 4.8% for the week ending March 23rd.

GDP was revised up to a 2.9% growth rate in Q4, a little better than expected.

International Trade in Goods widened further to $75.4 billion in February versus expectations for a deficit $74 billion.

Corporate Profits after-tax were down 6% for the year.

Retail Inventories were up 0.4% for the month.

Wholesale Inventories were unchanged versus expectations for a rise of 0.5% for the month.

Pending Home Sales rose 3.1% to 107.5 in February, rebounding from the 5% January drop to 104.3, and topping expectations for a rise of to 107.2.

Market Sentiment – Atlanta Fed Raphael Bostic said he is not seeing any upward pressure in wages despite the low unemployment rate. He continues to favor a gradual approach to hikes, more than big jumps, which could trigger volatility.

He went to add he thinks that inflation is rising and a good reason to get the Fed back to a neutral rate.

The iShares 20+ Year Treasury Bond ETF (TLT) traded higher for a second-straight session after reaching a peak of $121.64. Resistance at $121-$121.50 was split with a close above the latter being a continued bullish development.

Rising support is at $120.50-$120.

Market Analysis – The Spiders Dow Jones Industrial Average ETF (DIA) traded to a high of $240.72 midday with near-term resistance at $240.50-$241 holding.

The backtest to $237.05 held shaky support at $237-$236.50. A close below $235 would be a very bearish development with risk to the February 9th low of $233.76.

RSI is trying to clear resistance at 40. Support is at 35-30 with a close below the latter confirming additional weakness towards 25-20 and levels not seen since August 2015.

The Materials Select Sector (XLB) fell for the 11th time in 13 sessions after testing a low of $55.69. The fresh multi-month low cleared last Friday’s intraday low of $55.97 with upper support at $56-$55.50 failing to hold.

A close below the latter would be a continued bearish signal for a drop below $55 and October 2017 support levels. XLB is down nearly 10% from its mid-March peak of $61.74.

Near-term resistance is at $56.50-$57.

RSI appears to be headed towards another backtest towards 30 and a level that held earlier this month and was stretched in February. Resistance is at 35-40.

All the best,
Roger Scott