U.S. markets rebounded on Tuesday to keep all-time highs in focus following strong 1Q earnings from a number of blue-chip companies.
The major indexes held positive territory for much of the session before some late day selling pressure appeared but was turned away.
The Nasdaq gained 0.3% after tapping a morning and fresh 2019 high of 8,017.
Prior and lower resistance from late September at 8,000-8,050 was cleared and held into the close with a move above the latter getting 8,100-8,150 and all-time highs in play.
The Dow also rose 0.3% after testing a high of 26,530 shortly after the opening bell.
Prior and lower resistance at 26,500-26,750 was cleared but held with a close above the latter likely leasing towards a run at 27,000 and all-time highs.
The Russell 2000 added 0.2% while testing a session high of 1,585.
Late February and lower resistance at 1,585-1,600 held with additional hurdles at 1,625-1,650 on continued closes above the latter.
The S&P 500 climbed 0.1% following the intraday test to 2,916.
Lower resistance at 2,925-2,950 held with a move above the latter getting 2,975-3,000 and fresh lifetime highs in the mix.
Financials were the sector standout after soaring 1.4%.
Energy and Industrials were higher by 0.7% and 0.6%, respectively.
Real Estate was the weakest sector after sinking 2.4% while Healthcare tanked 2.1%. Utilities fell 1.2% to round out the laggards.
Global Economy – European markets closed higher across the board following positive economic news out of Germany.
Germany’s DAX 30 rallied 0.7% while the Belgium20, UK’s FTSE 100, and France’s CAC 40 advanced 0.4%. The Stoxx 600 Europe edged up 0.3%.
Germany’s investor sentiment index improved to 3.1 in April, up from -3.6 in March, and topping forecasts for a reading of 0.8.
Asian markets settled higher as U.S./ Japan trade negotiations started with the Bank of Japan Governor, Haruhiko Kuroda, saying some sort of protectionism around global trade was the most serious risk involved in the global economy.
China’s Shanghai surged 2.4% and Hong Kong’s Hang Seng jumped 1.1%. Australia’s S&P/ASX 200 was up 0.4% and South Korea’s Kospi added 0.3%. Japan’s Nikkei edged up 0.2%.
Industrial Production for March dipped -0.1%, with capacity slipping to 78.8%. Forecasts were for a rise of 0.3% with capacity at 79.2%. On a 12-month basis, production rose to a 2.8% year-over-year clip.
February production was bumped back up to a 0.1% gain, with February capacity revised to 79% from 79.1%. Manufacturing was unchanged from -0.3% and hasn’t posted a gain since December.
Autos and parts production fell 2.5% after rising 2.3% the previous month. Machinery production bounced 0.5% versus -2%.
Utilities edged up 0.2% from the prior 3.7% gain while mining was a drag, falling -0.8% from unchanged.
The NAHB Housing Market Index rose 1 point to 63 in April, matching expectations. The present single family index edged up to 69 from 68, helped by lower mortgage rates.
The future sales index dipped to 71 from 72 while the index of prospective buyer traffic rose to 47 from 44.
Redbook Store Sales were up 5% for the year in the week ending April 13th.
Market Sentiment – The Fed Board minutes to February and March meetings showed all 12 District Bank voted to leave the primary credit rate unchanged at the existing 3%.
No sentiment was expressed by at either the February 25 or the March 11 meetings for changing the primary credit rate at this time, and the Board approved the establishment of the primary credit rate at the existing level of 3%.
In March, the directors saw mixed reports on economic conditions across sectors and Districts. Labor markets remained tight, and some directors reported corresponding wage pressures and continued difficulty finding workers of all skill levels.
Some directors said they observed a slowdown in consumer spending, but others said that retail sales in their Districts had remained strong.
While concerns about tradepolicy had abated somewhat, many directors noted continued uncertainties about the global economy as a factor posing risks to the U.S. economic outlook.
The iShares 20+ Year Treasury Bond ETF (TLT) fell for the 3rd-time in 4 session after testing an intraday low of $122.14.
Fresh and major support at $122 and the 50-day moving average held with risk towards $121.50-$121 on a close below these levels.
Lowered resistance is at $122.50-$123. Continued closes back above $124 would be a more bullish development.
Market Analysis – The S&P 400 Mid Cap Index ($MID) has been in a 3-session holding pattern following last week’s breakout above the 1,950 level. Tuesday’s high reached 1,968 with major resistance at 1,975 holding.
This level served as prior support in mid-August and early October 2018. Continued closes above 1,975 would get 2,000-2,025 in play with the all-time peak at 2,053.
Current support is at 1950-1,925 with a move below the latter signaling additional weakness towards 1,900.
The 50-day moving average has cleared the 200-day to form a golden cross and is typically a bullish signal for higher highs.
RSI remains in an uptrend with resistance at 70.
A move above this level would signal additional strength towards 75-80 and February peaks. Support is at 60 with a close below this level signaling a possible near-term top and additional weakness towards 55-50.
The Spider S&P Retail ETF (XRT) has been in a tight trading between $45-$46 throughout April with Tuesday’s peak reaching $45.61.
Near-term resistance at $45.75-$46 held with a close above $46.25 being a more bullish signal.
Support is at $45.25-$45 and the 50-day moving average. A close below the latter opens up risk towards $44-$43.50 and mid-March support.
RSI has been flatlining with resistance is 60. A move above this level would be a bullish development with upside potential towards 65 and February highs.
Support is at 50 and has been holding throughout April with a move below this level signaling additional weakness.
All the best,