Small-Caps Nears 200-Day Moving Average

U.S. markets were slightly sluggish to start the shortened week as trade talks with China continued in Washington on Tuesday, with higher level negotiations starting later in the week.

The tight trading ranges expanded in the second half and the higher closes were bullish signals as the week after February options expiration is typically bearish. Volatility stayed slightly elevated after holding resistance on the open while closing below the 15 level for the 2nd-straight session.

The Russell 2000 rose 0.3% while testing a high of 1,578 in the final hour of trading. Fresh and lower resistance at 1,570-1,580 was cleared and held with additional hurdles at 1,590-1,600 and the 200-day moving average.

The Nasdaq gained 0.2% after making a late session run to 7,507 Fresh and lower resistance at 7,500-7,575 was cleared but held on the 2nd-straight close above the 200-day moving average.

The S&P 500 also added 0.2% following the late day push to 2,787. Lower resistance at 2,775-2,800 was cleared and held with a move above the latter getting 2,825-2,850 in play.

The Dow was up 8 points, or 0.03% after trading in a 141-point range while testing a high of 25,961. Fresh and lower resistance at 26,000-26,250 held with a close above the former being a continuing bullish development.

Materials and Utilities led sector strength after rising 0.6%. Consumer Staples and Consumer Discretionary advanced 0.5% and 0.4%, respectively.

Healthcare and Industrials were the only sector laggards after falling 0.2% and 0.04%.

ANALYST UPGRADES/DOWNGRADES
Freeport McMoRan (FCX) upgraded to Buy from Neutral at Citi
McDonald’s (MCD) upgraded to Overweight from Equal Weight at Stephens
PepsiCo (PEP) upgraded to Outperform from Neutral at Macquarie

CSX (CSX) downgraded to Sector Perform from Outperform at RBC Capital
Fiat Chrysler (FCAU) downgraded to Neutral from Buy at UBS
Papa John’s (PZZA) downgraded to Sell from Hold at Stifel

EARNINGS
Wednesday Before the Open (EST):
Analog Devices (ADI), Belden (BDC), CVS Health (CVS), Entergy (ETR), Fresenius Medical Care (FMS), Gannett (GCI), Garmin (GRMN), Henry Schein (HSIC), Innophos Holdings (IPHS), Lamar Advertising (LAMR), NiSource (NI), Owens Corning (OC), Sonic Automotive (SAH), Targa Resources (TRGP), Vishay Precision Group (VPG), Wix.com (WIX)

Wednesday After the Close (EST):

Agilent Technologies (A), Avis Budget Group (CAR), Boston Beer Company (SAM), Cheesecake Factory (CAKE), Eversource Energy (ES), Flowserve (FLS), GoDaddy (GDDY), Green Dot (GDOT), Inovalon (INOV), Jack in the Box (JACK), Kaiser Aluminum (KALU), Libbey (LBY), ManTech International (MANT), Netease.com (NTES), Nordson (NDSN), One Gas (OGS), Pegasystems (PEGA), Rogers (ROG), SolarEdge Technologies (SEDG), Sunoco (SUN), Tyler Technologies (TYL), Vipshop Holdings (VIPS), WPX Energy (WPX), Xperi (XPER)

UPCOMING ECONOMIC NEWS
Wednesday’s Economic Reports (EST):
MBA Mortgage Applications – 7:00am
Housing Starts – 8:30am
Building Permits – 8:30am
FOMC Minutes – 2:00pm

METALS / OIL

Gold closed at $1,344.80 an ounce, up $22.70
Silver settled at $15.97 an ounce, up $0.23
Copper finished at $2.87 a pound, up $0.08
Crude Oil is at $56.07 a barrel, up $0.28
Bitcoin Investment Trust (GBTC) ended at $4.68, up $0.49