U.S. markets showed strength to start the week to build off Friday’s gains with the Dow snapping a four-session losing streak. Near-term resistance levels held as trade concerns remained in focus but volatility dropped after spiking on the morning open.

The Dow jumped 1.4% after trading to a high of 24,961 while falling just shy of clearing the 25,000 level. The S&P 500 soared 1.1% to reclaim the 2,700 level while coming with 1% of clearing its 50-day moving average.

The Nasdaq gained 1% after rebounding 145 points off the morning low to reach a high of 7,350 while holding the 7,300 level. The Russell 2000 added 0.8% after testing 1,550 and clearing its 50-day moving average but levels that failed to hold into the closing bell.

Utilities surged 2% to lead sector strength while Financials and Real Estate were higher by 1.4%. There were no sector laggards.

Global Economy – European markets weathered Italian elections, political stabilization in Germany, and a Brexit update to finish higher on Monday.

Germany’s DAX 30 surged 1.5% while the Stoxx Europe 600 and the Belgium20 rallied 1%. UK’s FTSE 100 added 0.7% and France’s CAC 40 gained 0.6%.

The Eurozone March Sentix investor confidence fell 7.9 to an 11-month low of 24, below forecasts for a slip of 1 to 30.9.

The Eurozone February Markit composite PMI was revised lower to 57.1 from the previously reported 57.5, the slowest pace of expansion in 4-months.

Eurozone January retail sales slipped 0.1% month-over-month, matching forecasts.

Asian markets settled mostly lower with China’s Shanghai bucking the trend after adding 0.1%. Hong Kong’s Hang Seng dropped 2.3% while Australia’s S&P/ASX 200 gave back 1.1%. Japan’s Nikkei fell 0.7% and South Korea’s Kospi declined 0.6%.

The China February Caixin services PMI fell 0.5 to 54.2, weaker than expectations of for a dip of 0.4.

China’s government said its 2018 economic-growth target would remain around 6.5% for 2018 while predicting a reduced budget deficit. It also said it would cut excess capacity in the steel sector by 30 million metric tons and by 150 million in coal.

PMI Services Index for February came in at 55.9 in the final reading, matching expectations and up from the 53.3 print in January.

ISM Non-Manufacturing Index fell 0.4 points to 59.5 in February, but topping expectations of 58.8. This follows a 12-year high of 59.9 in January.

February TD Ameritrade IMX Level checked in at 5.95.

Market Sentiment – Federal Reserve Vice Chairman, Randal Quarles, said that U.S. regulators are mulling material changes to streamline the Volcker Rule by applying simpler definitions and tests of proprietary trading to ease bank compliance concerns.

He went on to add that certain foreign funds will be exempted from the Volcker Rule while reforms are being considered and that he wants to grant foreign banks more flexibility on their U.S. operations..

The iShares 20+ Year Treasury Bond ETF (TLT) declined for a second-straight session after testing an intraday low of $117.63. Upper support at $118-$117.50 held with continued risk to $116.50-$116 on a close below the latter. Lowered resistance is at $118.50-$119.

Market Analysis – The Spider S&P 500 ETF (SPY) traded to a late session high of $272.89 with near-term resistance is at $273-$273.50 and the 50-day moving average holding.

Continued closes above the latter would be bullish for a possible run towards $275-$277.50. Rising support is at $270-$267.50. The index has been making 2% intraday moves for a few weeks following February’s whipsaw action and continued volatility into this month.

RSI cleared near-term resistance at 50 with continued closes above this level keeping 60 in focus. Support is at 40 if 50 fails to hold.

The Utilities Select Spider (XLU) surged 2% after making a run to $50.05 ahead of the closing bell. Near-term resistance at $50.25-$50.50 and the 50-day moving average held with continued closes above the latter being a slightly bullish signal.

Rising support is at $49.50-$49 with a close below $48.50 signaling another short-term top.

RSI closed above 50 with fresh resistance at 60 on continued strength. We mentioned last month’s death cross with the 50-day moving average falling below the 200-day moving average was a bearish signal for lower lows.

The recent 52-week low reached $47.37 and would be back in play if $48.50 fails going forward.

All the best,
Roger Scott