U.S. markets were nervous to start the week as Wall Street prepares for a Fed announcement with a possible government shutdown looming by Friday if another spending agreement isn’t reached.

The news cycle will likely keep volatility heightened with economic reports throughout the week also swaying market action.

The Nasdaq tumbled 1.8% after testing an intraday low of 7,285 while closing above the 7,300 level and holding its 50-day moving average. The Russell 2000 stumbled 1% while tapping a low of 1,553 to breach its 50-day moving average but a level that held into the closing bell.

The Dow dropped 1.4% after bottoming at 24,453 to close below its 100-day moving average and a level that was breached but held earlier this month.

The S&P 500 also sank 1.4% while testing a low of 2,694 while holding the 2,700 level and its 100-day moving average into the close.

Technology tanked 2% and Health Care got hammered for 1.6%. Energy gave back 1.5% and Materials melted 1.4%.

There was no sector strength and a slightly bearish signal for the session.

Global Economy – European markets were lower across the board following rumblings the EU and UK have agreed to broad terms on Britain’s two-year Brexit transition deal.

UK’s FTSE 100 plummeted 1.7% and Germany’s DAX 30 was down 1.4%. The Stoxx Europe and France’s CAC 40 declined 1.1% while the Belgium20 fell 1%.

ECB Governing Council member Knot said that the outlook is almost as good as it gets for the Eurozone economy and the region is projected to continue a firm path of growth.

Eurozone January construction output fell 2.2% month-over-month, the biggest decline in a year.

Asian markets closed mixed for a second-straight session as China’s incoming central bank governor signaled he will maintain the course of financial liberation set forth by his predecessor.

China’s Shanghai was up 0.3% and Australia’s S&P/ASX 200 climbed 0.2%. Hong Kong’s Hang Seng gained nearly a dozen points, or 0.04%. Japan’s Nikkei declined 0.9% and South Korea’s Kospi was lower by 0.8%.

China February new home prices were up in 44 of 70 cities, down from 52 that rose in January.

There was no major economic news today.

Market Sentiment – The iShares 20+ Year Treasury Bond ETF (TLT) traded lower for a second-straight session following the backtest to $119.20.

Lower support at $119.50-$119 held with additional help at $118.50-$118 on a move below the latter. Resistance remains in play at $120-$120.50 and the 50-day moving average.

Market Analysis – The Spider Small-Cap 600 ETF (SLY) was down for the fourth time in five sessions with today’s low reaching $134.87. Support is at $134.50-$134 with a close below the latter signaling additional weakness.

Lowered resistance is at $136.50-$137 with a close above $137.25 getting $138-$140 and all-time highs back in the mix.

RSI is back in a downtrend with near-term support at 50. A close below this level would signal additional weakness to 40 and mid-February support levels.

The Health Care Select Sector Spider (XLV) was punished with a 1.6% pullback after trading down to $83.32 intraday. Support is at $83.50-$83.25 with a close below $83 being a continued bearish development.

Lowered resistance is at $84.50-$85 with the bigger hurdle at $85.50 50-day moving average.

RSI broke below 50 and appears headed towards near-term support at 40. A continued pullback or sector weakness could lead towards early February support at 30.

All the best,
Roger Scott