U.S. markets showed continued weakness on Monday’s open with June and February support levels coming into play. Some of the nervousness came after U.S. Trade Representative Robert Lighthizer called the 90-day truce with China a hard deadline over the weekend.

While a hard or soft deadline can be debated, the major indexes rebounded off their lows shortly afterwards to push positive territory while finishing the session mostly higher.

Volatility stayed slightly elevated but may have given a near-term bullish signal after holding major resistance for the 3rd-straight session.

The Nasdaq was up 0.7% despite trading to a morning low of 6,878 and briefly slipping back into negative territory for the year.

Lower support at 7,000-6,950 was breached with both levels holding on the run to 7,047 into the closing bell.

The S&P 500 added 0.2% after making a late day push to 2,647. However, major and lower support at 2,625-2,600 was breached on the opening drop to 2,583 with another move below the latter being a continuing bearish development.

The Dow gained 0.1% despite testing a morning low of 23,881. Major support from June at 24,000 was breached but held with a close below this level signaling additional weakness towards 23,750-23,500.

The Russell 2000 slipped 0.3% following the pullback to 1,422 and fresh 52-week low. Backup support at 1,425-1,420 was split with both levels holding on the close above the 1,440 level.

Technology jumped 1.4% while Communication Services rallied 0.8% and were the strongest sectors. Healthcare advanced 0.4%.

Energy and Financials lead sector laggards after falling 1.6% and 1.4%. Real Estate was lower by 0.4% to round out the losers.

Global Economy – European markets closed in the red after Prime Minister May confirmed to the parliament that the crucial Brexit vote will be delayed following fears that the British government was headed for an embarrassing defeat.

The Stoxx 600 Europe dropped 1.9% and the Belgium20 was lower by 1.7%. France’s CAC 40 and Germany’s DAX 30 gave back 1.5% while UK’s FTSE 100 was off 0.8%.

Germany’s October exports rose by 0.7%, topping expectations of 0.4%, while imports rose by 1.3%, above forecasts of 0.5%.

Germany’s October trade surplus eased slight to 18.3 billion euros from September’s preliminary report of 18.4 billion euros, but was larger than estimates for a decline to 17.1 billion euros.

Asian markets settle lower following weaker-than-expected trade data out of China.

Australia’s S&P/ASX 200 tanked 2.3% and Japan’s Nikkei sank 2.1%. Hong Kong’s Hang Seng declined 1.2% and South Korea’s Kospi was down 1.1%. China’s Shanghai fell 0.8%.

China’s November exports rose by 5.4% year-over-year, weaker than expectations of 9.4%, while imports rose 3% and below estimates of 14%.

China’s November CPI came in at 2.2% year-over-year, missing forecasts of 2.4%.

China’s November PPI eased to 2.7% year-over-year, matching estimates.

China’s November reserves rose to $3.061 trillion from Oct’s $3.053 billion, topping expectations for a decline to $3.044 trillion.

November TD Ameritrade IMX Level checked in at 5.27.

Job openings rose 119,000 to 7,079,000 in October, topping forecasts of 7 million. The rate hit 7 million for the first time ever in July and is now the third month out of four that job openings have been over this mark, reflecting a still-tight labor market.

The JOLTS rate edged up to 4.5% from 4.4%. October hirings rose 196,000 to 5,892,000 following the 210,000 drop to 5,696,000. The rate improved to 3.9% versus 3.8%.

Quitters fell 50,000 to 3,514,000 following the 84,000 decline to 3,564,000 previously. The rate slipped to 2.3% versus 2.4%.

Market Sentiment – The New York Fed’s November Survey of Consumer Expectations was stable, with the median 1-year ahead unchanged at 3% for an 8th-straight month. Expectations for the 3-year horizon dipped slightly to 2.9% from October’s 3%.

The Fed also noted inflation uncertainty increased slightly for both the 1- and 3-year horizons.

The outlook on home prices showed a dip to 3.1% in the median expectation for home price appreciation, from 3.3%, and has come down from 3.9% in June. Gas prices are also seen to be on the decline, with the 1-year ahead expected gas price change falling to 4.2%, the lowest since December 2017, from 4.5% in October.

The iShares 20+ Year Treasury Bond ETF (TLT) extended its winning streak to 7-straight sessions after tapping a high of $119.28. Fresh resistance at $119-$119.50 was split and held with a move above the latter getting $120-$121 and August highs in play.

Market Analysis – The Russell 2000 ETF (IWM) fell for the 4th-straight session following the pullback to $141.45 and fresh 52-week low. February support levels at $142.50-$142 were breached but held with a close below the latter getting $140 and September 2017 support in play.

Lowered resistance is at $144.50-$145.

Continued closes above $147.50 would be a slightly bullish development. However, the death cross that formed in mid-November remains a bearish development following two failed attempts at the 50-day moving average last week.

RSI is pushing upper support at 35-30. A close above the latter would signal additional weakness for a continued backtest towards 25-20 and October lows. Resistance is at 40.

The iShares PHLX Semiconductor ETF (SOXX) snapped a 3-session slide despite the intraday pullback to $156.52. Near-term and upper support at $156.50-$156 held.

A close below $155 would signal additional weakness towards $152.50-$152 and fresh October lows with the 52-week low at $151.58.

Lowered resistance is at $160-$160.50.

Continued closes above $162.50 would signal a possible near-term bottom although the 50-day moving average remains in a nasty downtrend.

RSI is in a slight uptrend with resistance at 45-50.

A close above the latter would signal additional strength. Support is at 40 with a move below this level signaling additional weakness.

I remain bullish on the stock market in the short term.

I don’t have much certainty passed the next 1000 points on the Dow since there’s too much uncertainty between China and U.S. and now potential impeachment talks re Trump.

Few weeks without drama would give market chance to show directional bias – till then we have to continue to rely and expect strong volatility.

Will balance the position with a few bear call spreads next few sessions.

Roger Scott