U.S. markets traded in a tight range throughout Tuesday’s session while consolidating recent gains to finish mixed.
The broader market and Tech tested higher 2019 highs while the blue-chips and small-caps lagged.
Meanwhile, volatility continues to deflate after testing a 6th-straight lower low while closing below a key level of support for the 2nd-straight session.
The Nasdaq rose 0.3% after trading to an intraday high of 7,854.
Major resistance at 7,850 was cleared but held with a lose above this level signaling additional strength towards 7,950-8,000.
The S&P 500 edged up less than a point, or 0.0% following the opening push to 2,872.
Fresh and lower resistance at 2,875-2,900 was challenged but held with a close above the latter getting 2,925-2,950 and all-time high in focus.
The Dow fell 0.3% after trading in negative territory throughout the session and tapping a low of 26,122.
Fresh and upper support at 26,000-25,750 easily held with a move below the latter being a slightly bearish signal.
The Russell 2000 dipped 0.2% following the morning fade to 1,545. Fresh and upper support at 1,545-1,535 held with a move back below the latter and the 50-day moving average signaling a near-term top.
Real Estate and Communication Services were sector leaders after rising 0.8% and 0.5%, respectively.
Consumer Staples and Energy led sector weakness with declines of 0.8% and 0.7%.
Global Economy – European markets showed strength for the 3rd-straight session despite disappointing economic news out of Britain along with a warning from the WTO on trade.
UK’s FTSE 100 rallied 1% while Belgium20 and Germany’s DAX 30 gained 0.6%. The Stoxx 600 Europe was higher by 0.4% and France’s CAC 40 added 0.3%.
U.K. Purchasing Managers’ Index edged up to 49.7 from 49.5 but remained below the 50 mark that divides growth from contraction.
The World Trade Organization warned that global trade shrank in Q4 due to the tariffs, retaliation, slower growth and market volatility into year-end.
World trade shrank by 0.3% in the fourth quarter of 2018 and is likely to grow by 2.6% this year, slower than 3% growth in 2018 and below a previous forecast of 3.7%.
Asian markets closed mostly higher with traders awaiting further developments in U.S./ China trade talks and Australia’s central bank leaving rates unchanged.
South Korea’s Kospi and Australia’s S&P/ASX 200 rose 0.4%.
Hong Kong’s Hang Seng and China’s Shanghai edged up 0.2%. Japan’s Nikkei slipped 3 points, or 0.02%.
Australia’s central bank left rates unchanged but adopted new language, suggesting the bank might be shifting toward a bias in favor of easing policy.
The Reserve Bank of Australia said it would monitor developments and set policy to support sustainable growth. They added this would provide flexibility to cut in response to upcoming employment data.
Redbook Store Sales were up 4.4% for the year in the week ending March 30th.
Durable Goods Orders dropped -1.6% in February, versus forecasts for a decline of -2.1%. Transportation orders declined 4.8% after rising 0.4% in January.
Excluding transportation, orders edged up 0.1% from -0.1%. Non-defense capital goods orders excluding aircraft slipped 0.1% from 0.9% while shipments increased 0.2% from -0.4%.
Non-defense capital goods shipments excluding aircraft were flat from 1% previously while inventories were up 0.3% from 0.5%. The inventory-shipment ratio was steady at 1.62.
Chain Store sales declined 1.2% in the week ending March 30th, following the prior week’s 3% advance.
The 12-month paced jumped to 0.9% year-over-year versus 0.1% previously.
Atlanta Fed’s Q1 GDPNow estimate was lifted to 2.1%, well above the 1.4% Blue Chip consensus.
Market Sentiment – The White House is expected to move ahead with the nomination of Stephen Moore for a seat on Federal Reserve, despite reports of unresolved legal and tax problems relating to his divorce.
The iShares 20+ Year Treasury Bond ETF (TLT) snapped a 2-session slide after trading to a high of $124.74. Prior and lower resistance at $124.75-$125.25 held.
A move above the latter could lead to a retest towards $126-$126.50 and fresh 52-week peaks.
Current support is at $124-$123.50.
Market Analysis – The Spider S&P 500 ETF (SPY) extended its winning streak to 4-straight sessions after trading to a high of $286.23. Prior and lower resistance from mid-October at $286.50-$287 held with a move above the latter getting $289.50-$290 in focus.
Rising support at $285-$284.50 with a move below the latter opening up risk towards $283-$282.50.
The 50-day moving average recently cleared the 200-day moving average to form a golden cross.
This is typically a bullish signal for higher highs.
RSI remains in an uptrend with resistance at 70 and the February/ March high.
Continued closes above this level would be a bullish signal with additional strength towards 75-80 and the latter representing the January 2018 highs.
The Real Estate Select Sector Spider (XLRE) snapped a 2-session slide following the push to $36.47 and fresh 52-week peak. The breakout of a 7-session trading range was a bullish signal with new resistance at $36.50-$36.75.
Continued closes above the latter could lead towards a run at $37-$37.50 over the near-term.
Current support is at $36-$35.75. A move below $35.50 and break below the prior trading range would be a bearish development and signaling additional weakness.
RSI is has been flatlining near the 70 area since mid-March with resistance at 75. A move above this level could lead to a possible run towards 78-80 and the prior peaks from November 2017.
This would also signal slightly overbought levels. Support is at 65-60 with a move below the latter and the February/ March low being a bearish development.
All the best,
Roger Scott.