Directional Bias For The Day:
- S&P Futures are higher; drifting down since 6:30 AM after making a high of 2787.75;
- Daily is flashing signs of topping; finding resistance on 30-minute timeframe and 15-minute chart is showing Stochastic Bearish Divergence
- Odds are for a sideways to a down day – watch for break above 2787.75 and below 2780.25 for clarity
- No Key economic data due:
Sentiment & Catalyst
- No discernible change in sentiment from the NYSE close on Thursday;
Markets Around The World
- Markets in the East closed mixed – Shanghai, Hong Kong, Sydney and Seoul were up; Tokyo, and Mumbai and Singapore are down
- European markets are higher
- Dollar index
- Crude Oil
- 10-yrs yield is at 2.667%, down from February 21 close of 2.688%;
- 30-years is at 3.018%, down from 3.045%
- 2-years yield is at 2.520%, down from 2.528%
- The 10-Year-&-2-Year spread is at 0.147, down from 0.160
- Critical support levels for S&P 500 are 2764.55, 2760.24 and 2754.60
- Critical resistance levels for S&P 500 are 2781.58, 2789.88 and 2800.18
- Key levels for eMini futures: break above 2787.75, the high of 6:30 AM and break below 2780.25, the low of 4:00 AM
- On Thursday, at 4:00 PM, S&P future (January contract) closed at 2775.25 and the index closed at 2774.88 – a spread of about +0.50 points; futures closed at 2774.25 for the day; the fair value is +1.00
- Pre-NYSE session open, futures price action is to the upside – at 8:15 AM, S&P 500 futures were up by +11.25; Dow by +123; and NASDAQ by +35.00
Directional Bias Before Open
- Weekly: Downtrend reversing
- Daily: Up
- 120-Min: Up-Side
- 30-Min: Side-Up
- 15-Min: Side-Up
- 6-Min: Up
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 mostly lower on Thursday February 21 in mostly lower volume. Dow Jones Transportation Average traded higher in higher volume. Most major indices are forming a three-day evening star pattern. A closed below Thursday’s low will complete the pattern.
The S&P 500 lost 0.4% on Thursday, as disappointing economic data helped simmer the market’s lengthy rally. The Dow Jones Industrial Average, the Nasdaq Composite, and the Russell 2000 also lost 0.4% apiece.
The S&P 500 energy (-1.6%), health care (-0.9%), and communication services (-0.6%) sectors underperformed the broader market. Conversely, the utilities (+0.8%) and consumer staples (+0.3%) sectors showed relative strength.
The stock market began the day slightly lower as weaker-than-expected economic data tempered buying interest. U.S. business investment declined for the second consecutive month in December, and the eurozone manufacturing sector experienced its first contraction since 2013.
U.S. Treasuries finished on a lower note, pushing yields higher across the curve. The 2-yr yield and the 10-yr yield increased three basis points each to 2.53% and 2.69%, respectively. The U.S. Dollar Index increased 0.2% to 96.62. WTI crude declined 0.3% to $57.00/bbl.
• Existing home sales decreased 1.2% month-over-month in January to a seasonally-adjusted annual rate of 4.99 million (Briefing.com consensus 5.05 million) from an upwardly revised 5.00 million (from 4.99 million) in December. Total sales were 8.5% lower than the same period a year ago.
o The key takeaway from the report is that existing home sales activity has not improved much since December even when taking into account the upward revision to the December reading.
• Durable goods orders increased 1.2% in December (Briefing.com consensus 1.3%) after an upwardly revised 1.0% increase (from 0.8%) in November. Excluding transportation, orders increased 0.1% (Briefing.com consensus 0.2%) after decreasing a revised 0.2% (from -0.4%) in November.
o The key takeaway from the report is that business investment remained weak, evidenced by the 0.7% decline in nondefense capital goods orders excluding aircraft. Furthermore, the November reading was revised down to -1.0% from -0.6%.
• The Philadelphia Fed Index for February fell to -4.1 (Briefing.com consensus 12.0) from 17.0 in January.
o The key takeaway from the report is that the headline decrease was driven by declines in most components with the Prices Paid Index returning to its low from 2017.
• The Conference Board’s Leading Economic Indicators Index decreased 0.1% in December (Briefing.com consensus -0.1%) after increasing 0.2% in November.
o The key takeaway from the report is that the Conference Board sees a path to GDP growth slowing to 2.0% by the end of 2019.
• Initial claims for the week ending February 16 decreased by 23,000 to 216,000 (Briefing.com consensus 225,000). Continuing claims for the week ending February 9 decreased by 55,000 to 1.780 million.
o The key takeaway from the report is that the decline returned the initial claims level into a sideways range that has been in place over the past year; however, the four-week moving average for initial claims remains at its highest level since January 2018.
- 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|
|Materials||Down||SPY (Cross-Under)||XLB (Cross-Over)||Above|
|Finance||Down||XLF (Cross-Over)||SPY (Cross-Under)||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)||SPY (Cross-Under)||Above|