U.S. markets showed steady strength ahead of a slew of corporate earnings due out after Thursday’s bell to get back into positive territory for the month.
The results will likely influence Friday’s action to set up the last trading for the month on Monday and the start of next week’s FOMC meeting on Tuesday.
Volatility relaxed and stayed below a key level of resistance with the major indexes remaining trapped in a broader trading range for much of April but off the March lows.
The Dow surged 1% after testing an intraday high of 24,402 while holding the 24,000 level for the second-straight session. The S&P 500 soared 1% following a run to 2,676 but shy of the early week high of 2,683. Both indexes closed within 1% of their 50-day moving averages.
The Nasdaq snapped a 5-session slide after zooming 1.7% while reaching a late day peak of 7,143. The index held the 7,000 level for the third-straight session and is just over 1% from clearing its 50-day moving average.
The Russell 2000 closed higher for the first time in six session after rising 0.5% while making a push to 1,562 ahead of the closing bell. The index held its 50-day moving average for the 3rd-straight session and appears to be forming a temporary bottom.
Technology led sector strength after jumping 1.8% while Consumer Discretionary and Energy were higher by 1.6% and 1.5%, respectively. Industrials were the only sector to finish in the red after giving back 0.4%.
Global Economy – European markets were higher after the ECB kept its key interest rates unchanged and confirmed that its net asset purchases are intended to run until the end of September 2018, or beyond, if necessary.
The Stoxx 600 Europe rallied 0.9% and France’s CAC 40 jumped 0.7%. Germany’s DAX 30 and UK’s FTSE 100 gained 0.6% while the Belgium20 was up 0.4%.
UK April CBI retailing reported sales rose 6 to -2, stronger than expectations of for a gain of 5 to -3.
German May GfK consumer confidence slipped 0.1 to 10.8, matching expectations.
Asian markets were mixed with the Chinese markets getting hit the hardest. China’s Shanghai sank 1.4% and Hong Kong’s Hang Seng tumbled 1.1%.
Australia’s S&P/ASX 200 slipped 0.2%. On the flip side, South Korea’s Kospi surged 1.1% while Japan’s Nikkei was higher by 0.5%.
Initial Jobless Claims fell 24,000 to 209,000 in the week ending April 21st, which was a larger drop than expectations for a reading of 231,000.
Durable Goods Orders rose 2.6% in March, topped expectations for a 1.6% increase. Excluding transportation products, though, orders were flat, which was worse than the projected 0.5% increase.
Kansas Fed Manufacturing Index checked in at 26.
International Trade in Goods deficit narrowed to $68 billion in March, versus the $75 billion deficit that had been forecast.
Market Sentiment – Atlanta Fed’s Q1 GDP Now estimate remained unchanged at 2%. The nowcast of the contribution of net exports to first-quarter real GDP growth increased from -0.68% points to -0.30% points.
The iShares 20+ Year Treasury Bond ETF (TLT) is trying to rebound off recent lows after pushing an intraday high of $118.13. Fresh resistance is at $118-$118.50 held with additional hurdles at $119-$119.50 and the 50-day moving average.
Near-term support is at $117.50-$117.
Market Analysis – The PowerShares QQQ (QQQ) made a run to $162.53 to close higher for the second-straight session following a 4-session slide.
Fresh resistance is at $162.50-$163 with additional hurdles at $164-$164.50 and the 50-day moving average. Near-term support is at $160.50-$160 with a move below the latter likely leading signaling additional weakness towards $158-$156.
RSI is approaching resistance at 50.
Continued closes above this level would be a bullish signal for a possible run towards 60 and the mid-month peak. Support is at 45-40.
The Financial Select Sector Spiders (XLF) have been a tight range between $27.50-$28 for the past nine sessions with today’s high tapping $27.81.
This area has been slightly stretched over this time frame with a close above resistance at $28.25 and the 50-day moving average signaling a possible bullish trend establishing.
Continued closes below $27.25 would be a bearish development for a possible backtest towards $27 and the 200-day moving average.
RSI has been struggling with resistance at 50 throughout the month.
Continued closes above this level would be a slightly bullish signal for a push towards 55-60 with the latter representing the February and March peak. Support is at 45-40.
All the best,
Roger Scott.