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Market Brief – Tuesday 3/5/19

Stocks were flat at open as the S&P 500 is staring its overhead resistance level right in the face. Treasury yields also started higher, as investors look towards higher yields to provide propellant for the equity market.

While the ISM Manufacturing surveys showed the manufacturing sector slowed in February, the ISM Services sector continues to expand despite a slowing global economy. The increase in the survey was led by an increase in New Orders and Business Activity.

December’s New Home Sales surprised analysts with a +3.7% MoM increase versus expectations of a -8.7% decrease. Part of December’s increase is being attributed to a decrease in the November data from +16.9% to +9.1%. On a year-over-year basis, New Home Sales continue their four-month slide, the longest slide since 2011.

China’s Commerce Minister stated last night that trade talks have been “difficult,” and that they have been “very short” despite the recent extensions. Based on the Trump Administration, a deal is at hand, but with this news out of China, it appears the two sides may be further apart than reported.

Stocks were flat on the day as 2,800 on the S&P continues to remain unbreachable by the Bulls. Treasury yields fell across the board and continue to suggest that stock prices will retest their December lows. While neither the 10- and 30-year Treasury yields haven’t reclaimed the bottom end of their 50-day moving averages but are setting up for a retest soon.

Physical gold was flat on the day. Both the gold and the silver miners are trying to find support at their 50-day moving averages, but the volume didn’t show much enthusiasm on behalf of the Bulls. There should be more downside here.

Agricultural commodities are looking at a potential bottom, as large swatches of volume usually occur at the beginning or end of a trend. Even though there are no signs to the end of the trade war, news today said the focus appears to be on American farmers, in particular, on corn and soybeans.

Credit card debt hit an all-time high of $870 billion in December, with the largest contributors being food, utilities, gas, and medical bills. Americans are forced to finance their everyday living expenses, which is not bullish for stocks.

The American Petroleum Institute reported crude inventories as Crude +7.29mm (+1.45mm exp), Cushing +1.1mm (+1.63mm exp), Gasoline -391k, and Distillates -3.1mm. This unexpectedly large build sent crude oil prices lower.