Directional Bias For The Day:
- S&P Futures are lower; moving down since 4:00 AM;
- Odds are for a sideways to up day – watch for break above 2771.25 and below 2766.75 for clarity
- No Key economic data due:
Sentiment & Catalyst
- No discernible sentiment
Markets Around The World
- Markets in the East closed mixed- Shanghai, Tokyo and Sydney closed up; Hong Kong, Mumbai, Seoul and Singapore closed down
- European markets are lower
- Dollar index
- Crude Oil
- 10-yrs yield is at 2.647%, down from February 15 close of 2.666%;
- 30-years is at 2.981%, down from 2.997%
- 2-years yield is at 2.504%, down from 2.520%
- The 10-Year-&-2-Year spread is at 0.143, up from 0.146
- Critical support levels for S&P 500 are 2766.96, 2763.22 and 2760.24
- Critical resistance levels for S&P 500 are 2775.59, 2792.63 and 2800.18
- Key levels for eMini futures: break above 2771.25, the high of 7:30 AM and break below 2766.75, the low of 7:00 AM
- On Friday, at 4:00 PM, S&P future (January contract) closed at 2775.75 and the index closed at 2775.60 – a spread of about -0.25 points; futures closed at 2777.00 for the day; the fair value is -1.25
- Pre-NYSE session open, futures price action is to the downside – at 9:00 AM, S&P 500 futures were down by -11.25; Dow by -91; and NASDAQ by -42.25
Directional Bias Before Open
- Weekly: Downtrend reversing
- Daily: Up
- 120-Min: Side
- 30-Min: Side
- 15-Min: Side-Down
- 6-Min: Down
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 higher on Friday February 15, before the three-day weekend, in higher volume. With Dow Jones Transportation Average closing above a downtrend lien from October high, all major indices have broken above their downtrend lines.
For the week, major indices closed higher in mostly higher volume. NASDAQ Composite traded in lower volume. All S&P sectors also closed higher for the week.
The S&P 500 gained 1.1% on Friday, as investors were relieved to hear that U.S.-China trade-talks produced some progress and that Congress passed a funding resolution to avoid another government shutdown. Friday’s advance increased the benchmark index’s weekly gain to 2.5%.
The Dow Jones Industrial Average (+1.7%), the Nasdaq Composite (+0.6%), and the Russell 2000 (+1.6%) also extended their weekly gains to 3.1%, 2.4%, and 4.2%, respectively.
All 11 S&P 500 sectors finished higher, led by gains in financials (+2.0%), energy (+1.6%), and health care (+1.5%). Conversely, the utilities (+0.3%) and communication services (+0.4%) sectors underperformed but still finished with modest gains.
U.S. Treasuries edged lower, pushing yields slightly higher. The 2-yr yield increased two basis points to 2.52%, and the 10-yr yield increased one basis point to 2.67%. The U.S. Dollar Index decreased 0.1% to 96.90. WTI crude rose 2.0% to $55.56/bbl.
• Import prices fell 0.5% in January and are down 1.7% over the last 12 months. Excluding fuel, they are down 0.2% over the last 12 months. Export prices declined 0.6% in January and are down 0.2% over the last 12 months. Excluding agricultural products, export prices are also down 0.2% year-over-year.
o The key takeaway is that the Import-Export Price Indexes for January tracked in a way that should keep the Federal Reserve tracking on its patient-minded path.
• The Empire Manufacturing Survey for February increased to 8.8 (Briefing.com consensus 7.0) from the prior month’s unrevised reading of 3.9.
• Industrial production declined 0.6% in January (Briefing.com consensus +0.2%) following a downwardly revised 0.1% increase (from 0.3%) in December. The January downturn was driven by a large drop in motor vehicle assemblies. The capacity utilization rate fell to 78.2% (Briefing.com consensus 78.8%) from an upwardly revised 78.8% (from 78.7%).
o The key takeaway from the report is that it will feed into concerns about a slowing U.S. economy. Manufacturing production fell 0.9% due to the downturn in motor vehicle assemblies, but excluding that factor, manufacturing production was still down 0.2% with decreases logged for most other major durable goods industries.
• The University of Michigan’s preliminary index of consumer sentiment for February increased to 95.5 (Briefing.com consensus 94.0) from the final reading of 91.2 for January, as attitudes improved with the end of the partial government shutdown and the Federal Reserve hitting the pause button on its interest rate hikes.
o The key takeaway from the report is the indication that consumers’ long-term inflation expectations fell to the lowest level recorded in the past half century, which is a vantage point that is certain to register in the Federal Reserve’s willingness to be patient-minded with its policy approach.
- 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|
|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|