Morning Notes – Monday February 25, 2019

Directional Bias For The Day:

  • S&P Futures are higher; moving up since 3:30 PM on Thursday
  • Odds are for an up day – watch for break below 2794.50 for change of fortune
  • Key economic data due:
    • Final Wholesale Inventories (est. 0.3%; prev. 0.3%) at 10:00 AM

Sentiment & Catalyst

  • Risk-on mood since the weekend when signs of trade-tariff issue beginning to getting resolved

Markets Around The World

  • Markets in the East closed higher
  • European markets are mostly higher – U.K. and Italy are down
  • Currencies:
    Up Down
    • EUR/USD
    • GBP/USD
    • USD/JPY
    • AUD/USD
    • NZD/USD
    • Dollar index
    • USD/CHF
    • USD/CAD
    • USD/INR
  • Commodities:
    Up Down
    • NatGas
    • Copper
    • Platinum
    • Palladium
    • Coffee
    • Cotton
    • Crude Oil
    • Gold
    • Silver
    • Sugar
    • Cocoa
  • Bonds
    • 10-yrs yield is at 2.676%, up from February 22 close of 2.655%;
    • 30-years is at 3.038%, up from 3.020%
    • 2-years yield is at 2.508%, up from 2.491%
    • The 10-Year-&-2-Year spread is at 0.168, up from 0.164

Key Levels:

  • Critical support levels for S&P 500 are 2781.58, 2774.93 and 2764.55
  • Critical resistance levels for S&P 500 are 2800.18, 2806.79 and 2814.75
  • Key levels for eMini futures: break above 2805.50, the high of 6:00 AM and break below 2794.50, the low of 9:30 PM on Sunday

Pre-Open

  • On Friday, at 4:00 PM, S&P future (January contract) closed at 2792.25 and the index closed at 2792.67 – a spread of about -0.50 points; futures closed at 2791.25 for the day; the fair value is +1.00
  • Pre-NYSE session open, futures price action is to the upside – at 7:30 AM, S&P 500 futures were up by +12.00; Dow by +148; and NASDAQ by +46.50

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 22 was a relatively small green candle with almost no upper shadow and small lower shadow
    • 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 and is at a downtrend line from January 2018 high
    • The index is nearing the 78.6% Fibonacci retracement of the decline from the high in early October 2018
  • Last week was up +17.07 or +0.6% and ATR is 29.65
  • Last week’s pivot point=2783.81, R1=2803.06, R2=2813.46; S1=2773.41, S2=2754.16; No pivot levels were breached;
  • An up week; fourth in a row and fourth in last five weeks and eight in last ten weeks
  • Last swing low, 2532.69, was the low on February 5, 2018 and breached in December 2018
  • Above 10-week EMA and 39-week SMA; above 89-week SMA
  • Downtrend Reversing
Daily
  • A green candle with almost very small upper and lower shadows
    • %K crossing above %D, above 90; potential %D Bearish Divergence;
    • RSI-9 turning up from above 70; near 75; SMA8 of RSI9 is rising above 70
    • Sequence of lower highs and lower lows since October 3, 2018; need to rise above 2815.15 to break it
  • Above 20-day EMA, 50-day EMA; above 100-day SMA; at/above 200-day SMA
  • Uptrend
2-Hour (e-mini future)
  • Moving up since 10:00 PM on 21-Feb-19, new YTD high levels
    • The Flag-Pennant, breakout January 30, 38.2% extension target near 2758.00 is achieved, the 61.8% extension target is near 2815.00 and the 100% extension target is near 2906.00
  • RSI-9 is turning down since 4:00 AM; potential bearish divergence
  • Above 20-bar EMA, which is above EMA10 of EMA50
  • Bias: Up
30-Minute (e-mini future)
  • Trending up within an up-sloping channel since 2:30 PM on 21-Feb-19
  • RSI-9 is near 65; potential bearish divergence forming
  • Above 20-bar EMA, which is above EMA10 of EMA50
  • Bias: Up
15-Minute (e-mini future)
  • Bollinger Band (20, 2.0) is sloping up since up since 2:15 AM on Friday
  • The Bollinger Band narrowed at 1:45 AM; price walking up the upper band
  • Stochastic (9, 1, 3): %K crossed  below %D from above 80 at 6:30 AM
  • Bias: Up

Previous Session

Major U.S. indices closed mostly higher on Friday February 22 in mostly higher volume. Dow Jones Transportation Average traded lower in lower volume. For the week, major indices rose but in lower volume, but the week had one fewer trading days than average week.

From Briefing.com:

The S&P 500 increased 0.6% this holiday-shortened trading week. This week featured the seventh round of U.S.-China trade talks and some reassurance from the Federal Reserve. The benchmark index increased its rally from the December 24 low to 18.8%.

The Dow Jones Industrial Average gained 0.6%, the Nasdaq Composite gained 0.7%, and the Russell 2000 gained 1.3%.

The S&P 500 utilities (+2.4%), materials (+2.3%), and information technology (+1.4%) sectors outperformed the broader market. Conversely, the energy (-0.5%), and consumer staples (-0.3%) sectors were the lone groups that finished with losses this week.

[…]

The main takeaway from the FOMC Minutes was that the Fed is going to be patient in raising rates and is likely to stop reducing the assets on its balance sheet later this year. The surprise – or maybe the important revelation – for the market to consider was the implication that the Fed could turn away from a “patient” mindset with raising interest rates if market uncertainty abates.
With the Fed maintaining its market-friendly position and U.S.-China trade talks seemingly progressing, or not getting worse, investors continued to not be too bothered by disappointing economic data.

[…]

  • 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) XLE 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) SPY (Cross-Under) Above
Telecom Down XLT (Cross-Over) XTL Above

 

Print Friendly, PDF & Email

Leave a Reply