Directional Bias For The Day:
- S&P Futures are lower; moving up since 7:00 AM; emerging descending (or symmetrical)triangle since the NYSE close on Thursday
- Odds are for a down day – watch for break below 2699.25 for change of fortune
- No key economic data due:
Markets Around The World
- Markets in the East closed mostly down – Singapore was up; Shanghai was closed
- European markets are down
- Dollar index
- Crude Oil
- 10-yrs yield is at 2.647%, up from February 7 close of 2.645%;
- 30-years is at 2.992%, up from 2.989%
- 2-years yield is at 2.500%, down from 2.529%
- The 10-Year-&-2-Year spread is at 0.168, up from 0.165
- Critical support levels for S&P 500 are 2691.13, 2687.26 and 2675.79
- Critical resistance levels for S&P 500 are 2706.17, 2719.32 and 2733.00
- Key levels for eMini futures: break above 2699.25, the high of 4:00 AM and break below 2687.00, the low of 7:30 AM
- On Thursday, at 4:00 PM, S&P future (January contract) closed at 2704.50 and the index closed at 2706.05 – a spread of about -2.00 points; futures closed at 2704.00 for the day; the fair value is +0.50
- Pre-NYSE session open, futures price action is to the downside – at 8:30 AM, S&P 500 futures were down by -12.75; Dow by -105; and NASDAQ by -52.25
Directional Bias Before Open
- Weekly: Downtrend reversing
- Daily: Up
- 120-Min: Down
- 30-Min: Down-Side
- 15-Min: Down-Side
- 6-Min: Side
The trend and patterns on various time frames for S&P 500:
|2-Hour (e-mini future)||
|30-Minute (e-mini future)||
|15-Minute (e-mini future)||
Major U.S. indices closed lower on Thursday February 7 in mostly higher volume. Dow Jones Transportation Average traded in higher volume. the indices gapped down at the open and then mostly traded down before recouping some losses near the end. Indices making irregular evening star – 4-cadnle – pattern, which suggests downswing or pause in the market
The S&P 500 lost 0.9% on Thursday, as recurring concerns about a slowdown in global growth and the prospects of a U.S.-China trade deal weighed on investor sentiment. In addition, an underlying sense that the market was due for a pullback also fueled broad-based profit taking.
The Dow Jones Industrial Average lost 0.9%, the Nasdaq Composite lost 1.2%, and the Russell 2000 lost 0.8%.
The S&P 500 energy (-2.1%), information technology (-1.4%), and materials (-1.4%) sectors led Thursday’s retreat. Conversely, the defensive-oriented, and higher-yielding, utilities (+1.3%) and real estate (+0.8%) sectors were the lone groups to finish with gains.
Growth concerns resurfaced following a batch of disappointing updates from overseas: (1) the Bank of England left its key rate unchanged at 0.75% and lowered its 2019 GDP growth outlook to 1.2% from 1.7%, (2) the EU Commission cut its 2019 euro area GDP growth forecast to 1.3% from 1.9%, (3) Germany reported a 0.4% month-over- month decline in industrial production in December and (4) the Reserve Bank of India surprisingly cut its key lending rate 25 basis points to 6.25%.
In earnings news, Twitter (TWTR 30.80, -3.36, -9.8%), Fiat Chrysler (FCAU 15.23, -2.12, -12.2%), and Tapestry (TPR 33.48, -5.83, -14.8%) all posted steep losses after the companies disappointed investors with their results. On the other hand, Chipotle Mexican Grill (CMG 585.78, +59.72) jumped 11.4% after it impressed investors with a strong report and reassuring outlook.
U.S. Treasury yields, which move inversely to prices, declined amid the economic growth concerns. The 2-yr yield decreased six basis points to 2.47%, and the 10-yr yield decreased five basis points to 2.65%. The U.S. Dollar Index increased 0.2% to 96.54. WTI crude lost 2.4% to $52.70/bbl.
• Initial claims for the week ending February 2 decreased by 19,000 to 234,000 (Briefing.com consensus 220,000). Continuing claims for the week ending January 26 decreased by 42,000 to 1.736 million.
o The key takeaway is that the labor market is still looking pretty good, as initial claims remain low, yet outside headlines are stirring concerns that might not remain the prevailing trend.
• Total outstanding consumer credit increased by $16.5 billion in December after increasing an upwardly revised $22.4 billion (from $22.1 billion) in November.
o The key takeaway from the report is that it shows the extension of consumer credit is rooted in nonrevolving debt (e.g. car loans and student loans) while revolving credit (e.g. credit cards), which can be a support for discretionary spending, is not expanding in a robust manner.
Investors will not receive any notable economic data on Friday.
- S&P 500 Sectors
|Sector||Daily Trend (Visual)||Relative Strength (Last Month – January)||Relative Strength (February)||%K vs. %D (January)|
|Consumer Staples||Down||SPY (Cross-Under)||SPY||Cross-Over|
|Utility||Under Pressure||SPY (X-Under)||SPY||Cross-Over|
|Heath Care||Down||SPY (Cross-Under)||SPY||Cross-Over|
|Real Estate||Down||XLRE (Cross-Over)||XLRE||Above|