Directional Bias For The Day:
- S&P Futures are higher; moving higher since 7:30 PM on Thursday;
- Daily and weekly trend is down
- Odds are for an up day with choppiness and elevated volatility – watch for break below 2470.75 for change of fortune;
- Key economic data due:
- Non-Farm Employment Change (312K vs. 179K; 155K Prev.) at 8:30 AM
- Average Hourly Earnings (0.4% vs. 0.3% est.; 0.2% prev.) at 8:30 AM
- Unemployment Rat (3.9% vs. 3.7% est.; 3.7% prev.) at 8:30 AM
Markets Around The World
- Markets in the East closed mostly up – Tokyo and Sydney closed down
- European markets are higher
- Dollar index
- Crude Oil
- 10-yrs yield is at 2.621%, down from January 3 close of 2.625%;
- 30-years is at 2.947%, down from 2.949%
- 2-years yield is at 2.459%, up from 2.696%
- The 10-Year-&-2-Year spread is at 0.162, down from 0.168
- Critical support levels for S&P 500 are 2443.96, 2397.94 and 2346.58
- Critical resistance levels for S&P 500 are 2488.04, 2495.01 and 2519.49
- Key levels for eMini futures: break above 2486.75, the high of 6:00 AM and break below 2470.75, the low of 8:30 AM
- On Thursday, at 4:00 PM, S&P future (January contract) closed at 2448.25 and the index closed at 2447.89 – a spread of about +0.25 points; futures closed at 2447.75 for the day; the fair value is -0.50
- Pre-NYSE session open, futures price action is to the upside – at 8:30 AM, S&P 500 futures were up by +25.25; Dow by +239; and NASDAQ by +77.25
Directional Bias Before Open
- Weekly: Down
- Daily: Down
- 120-Min: Side
- 30-Min: Down-Side
- 15-Min: Side-Up
- 6-Min: Up
The trend and patterns on various time frames for S&P 500 are:
|2-Hour (e-mini future)||
|30-Minute (e-mini future)||
|15-Minute (e-mini future)||
Major indices gapped down at the open from previous close and opened near the middle of the real-body of Wednesday and then closed below its low. A break below Thursday’s low will be bearish and a break above its high will continue the bounce that started on December 26.
The S&P 500 dropped 2.5% on Thursday, as a revenue warning from Apple (AAPL 142.19, -15.73, -10.0%) and weak manufacturing data stoked worries about a slowdown in global economic growth. The Dow Jones Industrial Average lost 2.8%, the Nasdaq Composite lost 3.0%, and the Russell 2000 lost 1.8%.
Nine of the 11 S&P 500 sectors finished in the red. The heavily-weighted information technology sector led the retreat with a loss of 5.1%, as Apple dragged on the group with a steep loss of 10.0%, which sent the stock to a level not seen since mid-2017. The industrials (-3.0%) and materials (-2.8%) sectors also underperformed the broader market.
Fears over growth and corporate earnings had investors flocking to risk-free U.S. Treasuries. Consequently, the 2-yr yield and 10-yr yield fell 11 basis points each, to 2.38% and 2.55%, respectively. The rally in Treasuries took place amid building expectations for a rate cut by the end of the year. The fed funds futures market now sees a 46.1% implied likelihood of a rate cut in December, up sharply from yesterday’s implied probability of just 9.6%. The U.S. Dollar Index lost 0.6% to 96.23.
• The ISM Manufacturing Index for December decreased to 54.1% (Briefing.com consensus 57.8%) from 59.3% in November.
o The key takeaway from the report is that the December decrease was fueled by a sharp pullback in the New Orders component, which is the same element that lifted the November ISM Manufacturing Index into the neighborhood of its high from 2018.
- S&P 500 Sectors
|Sector||Daily Trend (Visual)||Relative Strength (Last Month – December)||Relative Strength (January)||%K vs. %D (January)|
|Consumer Discretionary||Down||XLY (X-Over)||XLY||Below|
|Consumer Staples||Under Pressure||XLP||SPY (X-Under)||Below|
|Finance||Down||SPY (X-Under)||XLF (X-Over)||Below|
|Utility||Under Pressure||SPY (X-Under)||XLU||Below|
|Heath Care||Under Pressure||XLV||SPY (X-Under)||Below|
|Real Estate||Up||SPY (X-Under)||SPY||Below|