Morning Notes – Tuesday February 12, 2019

Directional Bias For The Day:

  • S&P Futures are higher; moving up since 2:30 PM on Monday;
  • Odds are for an up day – watch for break below 2720.25 for change of fortune
  • Key economic data due:
    • JOTS Jobs Openings (est. 6.84M; prev. 6.89M) at 10:00 AM

Sentiment & Catalyst

  • Risk-on sentiment due to potential avoidance of government shutdown

Markets Around The World

  • Markets in the East closed mostly higher – Mumbai and Singapore were down
  • European markets are mostly up – U.K. is down
  • Currencies:
    Up Down
    • EUR/USD
    • GBP/USD
    • USD/JPY
    • USD/CHF
    • AUD/USD
    • NZD/USD
    • Dollar index
    • USD/CAD
    • USD/INR
  • Commodities:
    Up Down
    • Crude Oil
    • NatGas
    • Gold
    • Silver
    • Platinum
    • Palladium
    • Sugar
    • Coffee
    • Cotton
    • Cocoa (Unch.)
    • Copper
  • Bonds
    • 10-yrs yield is at 2.684%, up from February 11 close of 2.661%;
    • 30-years is at 3.019%, up from 2.999%
    • 2-years yield is at 2.496%, unchanged
    • The 10-Year-&-2-Year spread is at 0.188, up from 0.165

Key Levels:

  • Critical support levels for S&P 500 are 2703.79, 2697.45 and 2681.83
  • Critical resistance levels for S&P 500 are 2724.15, 2733.00 and 2738.98
  • Key levels for eMini futures: break above 2730.25, the high of 7:30 AM and break below 2720.25, the low of 0:30 AM

Pre-Open

  • On Monday, at 4:00 PM, S&P future (January contract) closed at 2708.75 and the index closed at 2709.80 – a spread of about -1.00 points; futures closed at 2708.25 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 +18.50; Dow by +194; and NASDAQ by +53.50

Directional Bias Before Open

  • Weekly: Downtrend reversing
  • Daily: Up
  • 120-Min: Up
  • 30-Min: Up
  • 15-Min: Up
  • 6-Min: Up

The trend and patterns on various time frames for S&P 500:

Monthly
  • Under Pressure
  • October 2018 closed sharply lower; broke below previous four months’ lows; only third down month since October 2016; November was a harami spinning top near the lower end of October
  • Uptrend resumption since Feb 08, 2016 after a pull back of -15.2% – continues; higher highs and higher lows
Weekly:
  • The week ending on February 8 was a doji candle following the bullish engulfing candle of previous week; staying above the downtrend line from October 2018 high
    • Stochastics (9,1, 3) and RSI (14) moving up – %K is above %D and above 90; RSI is moving up and is just above 50
    • The index is at the 61.8% retracement of the decline from the high in early October 2018
    • The index reached below the 50% Fibonacci retracement level – at 2374.98 – from the rally from February 2016 low and reached a low of 2346.58; the 61.8% Fibonacci retracement is near 2251.86
    • During the week of October 22, Stochastics reached the lowest since the week of October 31, 2016; last week RSI reached the lowest since the week on August 15, 2011;
  • Last week was up +1.35 or +0.0% and ATR is 57.15
  • Last week’s pivot point=2709.56, R1=2737.30, R2=2766.71; S1=2680.15, S2=2652.41; No pivot levels were breached;
  • An up week; second in a row and fourth in last five weeks and sixth in last ten weeks
  • The break above an ascending triangle in May 2018 is nullified as the price has fallen below its low
  • The break above a down sloping flag on April 24 2017 is also nullified; the 161.8% extension target near 2835.46 was achieved; 100% extension target of a longer flag-pole near 2913.13 is achieved
  • Last swing low, 2532.69, was the low on February 5, 2018 and breached in December 2018
  • Below 10-week EMA and 39-week SMA; below 89-week SMA (first since June 27, 2016)
  • Downtrend Reversing
Daily
  • A small doji candle just above the high of Friday
    • %K is below %D falling below 80;
    • RSI-14 just above 60;
    • RSI-9 is falling; near 60; SMA8 of RSI9 is till rising
    • Sequence of lower highs and lower lows since October 3, 2018; need to rise above 2800.18 to break it
  • Above 20-day EMA, 50-day EMA; at/above 100-day SMA; below 200-day SMA
  • Uptrend
2-Hour (e-mini future)
  • Drifting up since 10:00 AM on Friday;
    • Double Bottom/Horizontal Channel breakout at 2:00 PM on Monday; 100% extension target near 2726.00 is achieved; 161.8% extension target is near 2738.50
    • The Flag-Pennant, breakout January 30, 38.2% extension target is near 2758.00, the 61.8% extension target is near 2815.00 and the 100% extension target is near 2906.00
  • RSI-9 is moving higher 10:00 AM on February 7; bullish Divergence at 6:00 AM on Friday; bullish Failure Swing at 6:30 AM on Tuesday
  • Above 20-bar EMA, which is at/below EMA10 of EMA50
  • Bias: Up
30-Minute (e-mini future)
  • Moving up since 2:30 PM on Monday; continuing the larger move up since Friday afternoon
  • RSI-9 is above 65 but declining since 6:30 AM; potential bearish Divergence
  • Above 20-bar EMA, which is above  EMA10 of EMA50
  • Bias: Up
15-Minute (e-mini future)
  • Bollinger Band (20, 2.0) is moving up since 6:30 PM; Expansion from 7:15 PM to 11:00 PM
  • The Bollinger Band Squeeze from 2:00 AM to 5:00 AM; small Expansion since; price walking up the upper band
  • Stochastic (9, 1, 3): %K crossed below %D from above 90 at 7:00 AM
  • Bias: Up

Previous Session

Major U.S. indices closed mostly higher on Monday February 11 in mixed volume. Dow Jones Industrial Average closed down. Dow Jones Transportation Average and Russell 2000 traded in higher volume. DJIA, S&P 500 and NASDAQ Composite traded in lower volume. The day’s range was small.

From Briefing.com:

The S&P 500 increased 0.1% on Monday in a lackluster session. The major averages wavered around their flat lines throughout the day with investors preferring to wait and see for progress on U.S.-China trade talks.

The Nasdaq Composite gained 0.1%, and the Dow Jones Industrial Average lost 0.2%. The Russell 2000, meanwhile, outperformed with a gain of 0.8%.

[…]

The S&P 500 industrials (+0.6%) and energy (+0.5%) sectors outperformed the broader market. Conversely, the communication services (-0.6%), health care (-0.1%), and utilities (-0.1%) sectors were the lone groups to finish with losses.

Relative strength from the transport stocks underpinned the outperformance of the industrial sector. The Dow Jones Transportation Average increased 1.3%, led by gains from Norfolk Southern (NSC 176.95, +5.49, +3.2%) and Avis Budget (CAR 27.58, +1.90, +7.4%).

[…]

U.S. Treasuries finished the day on a lower note, pushing yields higher across the curve. The 2-yr yield increased two basis points to 2.48%, and the 10-yr yield increased three basis points to 2.66%. The U.S. Dollar Index rose 0.4% to 97.05, setting a new high for 2019. WTI crude lost 0.7% to $52.39/bbl.

[…]

  • S&P 500 Sectors
Sector Daily Trend (Visual) Relative Strength (Last Month – January) Relative Strength (February) %K vs. %D (January)
Consumer Discretionary Down XLY SPY (Cross-Under) Above
Consumer Staples Down SPY (Cross-Under) SPY Cross-Over
Energy Down XLE (Cross-Over) SPY (Cross-Under) Above
Materials Down SPY (Cross-Under) SPY Above
Industrials Down XLI (Cross-Over) XLI Above
Finance Down XLF (Cross-Over) SPY (Cross-Under) Above
Technology Down SPY XLK (Cross-Over) Above
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
Telecom Down XLT (Cross-Over) XTL Above

 

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