U.S. markets trended lower for a 2nd-straight session as Wall Street awaits Wednesday’s FOMC minutes and Friday’s official start to the 1Q earnings season.
The major indexes held near-term support levels holding but closed at sessions low with volatility closing above a key level of support.
The Russell 2000 sank 1.3% following the pullback to 1,558.
Lower support at 1,575-1,560 and the 200-day moving average failed to hold to open up risk towards 1,550-1,535 and the 50-day moving average.
The Dow fell 0.7% after trading down to 26,103 ahead of the closing bell.
Lower support at 26,250-26,000 held with a move below this level opening up risk towards 25,750 and the 50-day moving average.
The S&P 500 closed lower for the 1st time in 9 sessions after giving back 0.6% while tapping a morning low 2,873.
Current and upper support at 2,875-2,850 held with backup help at 2,825-2,800 and the 50-day moving average.
The Nasdaq also dropped 0.6% following the late day test to 7,897.
Upper support at 7,900-7,850 but held with a move below 7,800 being a bearish signal.
Communication Services and Utilities gained 0.3% and 0.2%, respectively, and were the only sectors that showed strength.
Industrials and Energy were the main sector laggards after sinking 1.4% and 1.2%.
Global Economy – European markets closed lower over fresh debate on the Brexit timeline extension.
Germany’s DAX 30 was down 0.9% and France’s CAC 40 gave back 0.7%. The Stoxx 600 Europe declined 0.5% and UK’s FTSE 100 was off 0.4%. The Belgium20 nudged down 0.1%.
Asian markets closed mostly higher.
Hong Kong’s Hang Seng rose 0.3% and Japan’s Nikkei was up 0.2% and
South Korea’s Kospi added 0.1% while Australia’s S&P/ASX 200 was up less than a point.
China’s Shanghai slipped 0.2%.
NFIB Small Business Optimism Index inched up 0.1% to 101.8 in March after February’s 0.5% gain to 101.7 in February.
Positive contributions including plans to hire, good time to expand, positive earnings trends, and compensation plans.
Negatives were plans to increase inventories and credit conditions. Small business owners cited labor costs as their biggest problem, along with the ability to find skilled workers.
The JOLTS report showed February job openings fell 538,000 to 7,087,000, missing expectations of 7,565,000.
This represents the lowest since March 2018, but openings remain solid, and have been above 7 million for 11-straight months. The rate dropped to 4.5% from 4.8%. Hirings declined 133,000 to 5,696,000 following the 112,000 rise to 5,829,000.
The rate declined to 3.8% from 3.9%. Quitters dipped 3,000 to 3,480,000 versus January’s 92,000 gain to 3,483,000. The rate was steady at 2.3%.
IMF cut its global growth forecasts for the third time in 6 months after lowering the world growth rate to 3.3% for 2019 versus 3.5%, previously.
Redbook Store Sales were up 4.8% for the year in the week ending April 6th.
Chain Store Sales rose 3.5% in the week ending April 6th, after dropping 1.2%, previously.
The 12-month pace accelerated to 1.6% year-over-year from the prior 0.9% clip.
Market Sentiment – The iShares 20+ Year Treasury Bond ETF (TLT) was up for the 3rd time in 4 sessions following the intraday push to $124.33.
Lower resistance at $123.75-$124.25 was cleared and held with a move above $124.50 being a more bullish development.
Support remains at $123.50-$123.
Market Analysis – The Spider Small-Cap 600 ETF (SLY) fell for the 2nd-straight session After trading to a late session low of $67.62.
Near-term and upper support at $67.50-$67 and the 50-day moving average held.
A close below the latter would be a bearish development with risk towards $66-$65 and late March support levels.
Current resistance is at $68-$68.50 with additional hurdles at $69-$69.50 and the 200-day moving average.
RSI is in a downtrend with support at 50.
A close below this level would signal additional weakness towards 45-40 with the latter representing the March low. Resistance is at 55-60.
The Dow Jones Transportation Average ($TRAN) had its 4-session winning streak snapped after trading down to 10,611.
Current support at 10,600 held with a move below this level opening up risk towards 10,500-10,400 and the 200/50-day moving averages.
Near-term resistance is at 10,700-10,800.
Continued closes above the latter would be a bullish signal for additional strength towards 11,000 and the late November peak.
RSI is in a slight downtrend with support at 60.
A move above this level gets 55-50 in play. Resistance is at 65-70.
All the best,
Roger Scott.