Directional Bias For The Day:
- S&P Futures are little changed; drifting down since 4:30 AM after rising since 1:00 Pm on Monday
- Odds are for a down to sideways day – watch for break above 2796.50 for change of fortune
- Key economic data due:
- ISM Non-Manufacturing PMI (est. 57.4; prev. 56.7) at 10:00 AM
- New Home Sales (est. 597K; prev. 657K) at 10:00 AM
Markets Around The World
- Markets in the East closed mixed – Shanghai, Hong Kong and Mumbai were up; Tokyo, Sydney, Seoul and Singapore were down
- European markets are mostly lower – U.K. is up
- Dollar index
- Crude Oil
- 10-yrs yield is at 2.739%, up from March 4 close of 2.722%;
- 30-years is at 3.100%, up from 3.090%
- 2-years yield is at 2.565%, up from 2.549%
- The 10-Year-&-2-Year spread is at 0.174, up from 0.173
- Critical support levels for S&P 500 are 2783.16, 2767.66 and 2757.90
- Critical resistance levels for S&P 500 are 2795.99, 2803.24and 2814.92
- Key levels for eMini futures: break above 2796.50, the high of 7:00 AM and break below 2785.50, the low of 8:30 PM on Monday
- On Monday, at 4:00 PM, S&P future (January contract) closed at 2793.25 and the index closed at 2792.81 – a spread of about +0.50 points; futures closed at 2791.50 for the day; the fair value is +1.75
- Pre-NYSE session open, futures price action is little changed – at 7:30 AM, S&P 500 futures were up by +1.75; Dow up by +6; and NASDAQ down by -0.50
Directional Bias Before Open
- Weekly: Uptrend
- Daily: Up
- 120-Min: Side
- 30-Min: Down-Side
- 15-Min: Down-Side
- 6-Min: Down-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 Monday March 4 in mostly higher volume. Dow Jones Transportation Average traded in lower volume. Indices gapped up at the moment and the immediately faced a resistance by October 2018 high and then traded down. Most formed a bearish engulfing candlestick, albeit with long lower shadows, and flashing reversal signs. Break below Monday’s low is critical to determine the short term move. pattern.
The S&P 500 advanced as much as 0.5% following a report that the U.S. and China are nearing a trade deal. The benchmark index was then down as much as 1.3% following an inability to sustain a retest of its November high. Renewed buying interest, however, propelled an afternoon rebound effort, leaving the S&P 500 with a loss of 0.4%.
The Dow Jones Industrial Average (-0.8%), the Nasdaq Composite (-0.2%), and the Russell 2000 (-0.9%) also finished off their session lows.
Conversely, the materials (+0.4%), real estate (+0.4%), utilities (+0.2%), and energy (+0.2%) sectors outperformed.
The subsequent pullback included some technical drivers, too. The retest of the November high sparked some reflex selling interest that ultimately sent the S&P 500 below the 2800 level. The quick descent was likely exacerbated by weak-handed holders of long positions (i.e. performance chasers) who felt trapped and anxious about getting involved in the market rally too late.
An afternoon wave of buyers tempered selling from getting too out of hand, though. The S&P 500 sectors pared losses, allowing the benchmark index to close at its afternoon highs but still under the 2800 level.
U.S. Treasuries edged higher, pushing yields lower across the curve. The 2-yr yield declined one basis point to 2.54%, and the 10-yr yield declined three basis points to 2.72%. The U.S. Dollar Index increased 0.1% to 96.61. WTI crude increased 1.3% to $56.53/bbl.
• Total construction spending declined 0.6% in December (Briefing.com consensus -0.3%) after increasing 0.8% in November.
o The key takeaway from the report is that residential construction spending was soft in December, although the market effectively knew that already based on the data seen in the Q4 GDP report.
- S&P 500 Sectors
|Sector||Daily Trend (Visual)||Relative Strength (Last Month – February)||Relative Strength (March)||%K vs. %D (March)|
|Consumer Discretionary||Down||SPY (Cross-Under)||SPY||Above|
|Utility||Under Pressure||SPY||XLU (Cross-Over)||Above|
|Real Estate||Down||SPY (Cross-Under)||SPY||Below (Cross-Under)|