[Chart courtesy of MarketWatch.com]

1. Moving the markets

An early drop below the unchanged lines had the major indexes on the defensive right after the opening bell. After Friday’s decent start to the earning season, Goldman Sachs and Citi Group underwhelmed with their report cards.

With these two institutions being banking powerhouses, investors were disappointed as those two were expected to provide some clarity and guidance not only for the state of the banking sector but also for the economy in general.

That did not happen as both banks reported sharp earnings declines compared to Q1 last year, but at least they managed to exceed analysts’ low profit expectations. Now the experts are afraid that Q1 2019 earnings for the S&P 500 complex may suffer “the first YoY decline in nearly three years,” due to economic headwinds appearing to accelerate.

In the end, this turned out to be a “nothing” session with nothing gained and not much lost. Looking at the big picture, we can see that it’s not the global economy that is levitating the markets, it’s the ever-accelerating money supply, as this chart clearly demonstrates.

There is a good chance that this trend will continue, thereby throwing a much-needed assist to make sure that major indexes will take out their all-time highs made in 2018.

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1. Moving the markets

The S&P 500 came within a few points of touching its 2,900 level, but lack of follow through momentum pulled the major indexes off the highs and below the unchanged lines before a rebound limited the damage. The retreat occurred as uneasiness prevailed amongst traders in view of the upcoming earnings season, which kicks off unofficially on Friday.

Analysts have projected S&P 500 earnings to drop -4.2% YoY leaving the big boys on Wall Street a little wary before reviewing not only the latest results but also managements’ outlook for the next 12 months. Until those facts become known, we may see more of the directionless meandering of the indexes, as we witnessed today.

Another fly in the ointment could be the signs of lackluster growth throughout world economies, which may deflate the bullish craving despite the indexes hovering near all-time highs. I think, the markets need a solid driver to push through overhead resistance levels, and meager earnings may simply not be enough.

On the other hand, focused jawboning about the latest and greatest U.S.-China trade talks, along with the Fed uttering more dovish comments might be enough to take out the old highs.

Seems like economic adviser Kudlow took the lead by proclaiming that “I don’t see rates rising again in my lifetime,” which to me indicates that a recession is built in the cake and will have to be dealt with sooner or later. After all, rising interest rates are a sign of a strong economy and not a weak one, while low rates indicate the reverse.

Speaking of reverse, today interest rates rose with the 10-year bond yield having now recaptured the 2.50% level, which helped the dollar index to break its 3-day losing streak.

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1. Moving the markets

Investors were all over the released March Fed minutes trying to gain some insight as to why the Fed decided to give up on normalizing their monetary policy. Recall that last month the Fed abandoned plans for further rate increases in 2019 due to uncertainty over the lack of growth not just in the U.S. but global economies as well.

Other worries listed were the U.K.’s struggle to leave the EU, ongoing trade tensions between the U.S. and China and allegedly unexpected tame inflation data. In the end, there appeared to be too many unknowns causing the committee to leave interest rates unchanged.

But today, we learned that consumer prices rose at the fastest pace in 14 months in March but, with the following line always used as the saving grace, gains were small when excluding volatile food and energy prices.

The European Central Bank (ECB) seemed to use the same playbook, as they announced no changes to monetary policy and confirmed its intention of leaving rates at current levels till the end of 2019.

The markets took it all in stride with the major indexes remaining mostly above their unchanged lines with the S&P 500 and Nasdaq seeing more buying at the end of the session than the Dow, which barely slipped into the green.

Helping the last hour push was a short squeeze, the biggest since February 27^th, while interest rates fell with the 10-year yield now back below the 2.5% level causing the U.S. Dollar index to drop to its lows of the session.

Our Trend Tracking Indexes (TTIs) benefited from the last hour ramp keeping our “Buy” signals intact.

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