Morning Notes – Thursday March 7, 2019

Directional Bias For The Day:

  • S&P Futures are little changed to up; moving since 2:30 AM; below a downtrend line
  • Odds are for a down to sideways day – watch for break above 2778.75 and above the downtrend line for change of fortune
  • Key economic data due:
    • ECB Monetary Policy Statement at 7:30 AM
    • ECB Press Conference at 8:30 AM
    • Revised Non-Farm Productivity (1.9% vs. 1.5% est.; prev. 2.3%) at 8:30 AM
    • Unemployment Claims (223K vs. 225K est.) at 8:30 AM

Markets Around The World

  • Markets in the East closed mixed – Shanghai, Sydney, Mumbai and Singapore were up; Hong Kong, Tokyo and Seoul were down
  • European markets are mostly up – U.K. and Switzerland are down;
  • Currencies:
    Up Down
    • Dollar index
    • USD/CHF
    • AUD/USD
    • NZD/USD
    • EUR/USD
    • GBP/USD
    • USD/JPY
    • USD/CAD
    • USD/INR
  • Commodities:
    Up Down
    • Crude Oil
    • Copper
    • Platinum
    • Palladium
    • Coffee
    • NatGas
    • Gold
    • Silver (Unch.)
    • Sugar
    • Cotton
    • Cocoa
  • Bonds
    • 10-yrs yield is at 2.676%, down from March 6 close of 2.692%;
    • 30-years is at 3.058%, down from 3.071%
    • 2-years yield is at 2.504%, down from 2.520%
    • The 10-Year-&-2-Year spread is at 0.172, unchanged

Key Levels:

  • Critical support levels for S&P 500 are 2767.66 2757.90 and 2745.15
  • Critical resistance levels for S&P 500 are 2775.64, 2778.24 and 2783.89
  • Key levels for eMini futures: break above 2778.75, the high of 2:00 PM on Wednesday and break below 2763.50, the low of 6:30 AM

Pre-Open

  • On Wednesday, at 4:00 PM, S&P future (January contract) closed at 2772.00 and the index closed at 2771.45 – a spread of about +0.50 points; futures closed at 2771.50 for the day; the fair value is +0.50
  • Pre-NYSE session open, futures price action is to the upside – at 8:15 AM, S&P 500 futures were up by +3.00; Dow by +27; and NASDAQ by +4.00

Directional Bias Before Open

  • Weekly: Uptrend
  • Daily: Up Under Pressure
  • 120-Min: Down
  • 30-Min: Down
  • 15-Min: Down
  • 6-Min: Side

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 March 1 was a long legged doji, with very small upper shadow, at the top
    • Stochastics (9,1, 3) and RSI (14) moving up – %K is crossing below %D above 95; RSI is moving up and is just above 60 and is breaking above a downtrend line from January 2018 high
    • The index is at 78.6% Fibonacci retracement of the decline from the high in early October 2018
  • Last week was up +11.02 or +0.4% and ATR is 38.36
  • Last week’s pivot point=2797.44, R1=2819.74, R2=2835.80; S1=2781.38, S2=2759.08; R1/R2 pivot levels were breached;
  • An up week; fifth in a row and ninth 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
  • Uptrend
Daily
  • A relatively large red with almost no lower and upper shadows; still entirely within the lower shadow of Monday’s candle
    • %K is below %D; below 10 after making a Stochastic Spike down and a Bearish Divergence
    • Stochastic (70, 1, 3) Pop since February 11
    • RSI-9 turned below 70 and is nearing 50; Bearish Divergence
    • Technical breach of sequence of lower highs and lower lows since October 3, 2018; made intra-day high above 2815.15 but did not close above it
  • Above 20-day EMA, 50-day EMA; above 100-day SMA; at/above 200-day SMA
  • Uptrend Under Pressure
2-Hour (e-mini future)
  • Trending down since 8:00 Am on Monday after a brief bounce up
    • The Flag-Pennant, breakout January 30, the 61.8% extension target near 2815.00 is achieved and the 100% extension target is near 2906.00
  • RSI-9 is bouncing above 30 after reaching 20 and made a Bullish Divergence at 2:00 AM; below a downtrend line
  • Below 20-bar EMA, which is below EMA10 of EMA50
  • Bias: Down
30-Minute (e-mini future)
  • Moving down since 6:00 PM on Sunday; broke below a don-sloping channel at 10:30 AM on Wednesday
  • RSI-9 is moving up after dipping below 30; above 40;
  • At/above 20-bar EMA; below EMA10 of EMA50
  • Bias: Down
15-Minute (e-mini future)
  • Bollinger Band (20, 2.0) is moving down since 9:30 AM on Wednesday
  • The Bollinger Band was relatively narrow from 11:45 PM to 7:30 AM; expanding since with price walking up the upper band
  • Stochastic (9, 1, 3): %K is crisscrossing %D above 70
  • Bias: Down

Previous Session

Major U.S. indices closed lower on Wednesday March 6 in mostly higher volume. Dow Jones Transportation Average traded in lower volume. The trend for the day was decidedly down and the indices closed near the lows. Most still haven’t broken below the low of Monday, when indices made long legged bearish engulfing candles. Russell 2000 and DJT have broken below their Monday lows.

From Briefing.com:

The S&P 500 lost 0.7% on Wednesday, pulling back for the third straight session after a strong start to the year. With few catalysts to justify further gains, stocks succumbed to some profit taking with shares of energy, health care, and semiconductor companies leading the retreat.

The Dow Jones Industrial Average lost 0.5%, and the Nasdaq Composite lost 0.9%. The Russell 2000 underperformed with a steep loss of 2.0%.

The S&P 500 health care (-1.5%) and energy (-1.3%) sectors were Wednesday’s laggards, weighed down by some industry-specific overhangs. Conversely, the materials (+0.2%), utilities (unch), and communication services (unch) sectors outperformed.

[…]

On a related note, the OECD cutting its global GDP growth forecast for 2019 to 3.3% from 3.5%, New York Fed President Jon Williams (FOMC voter) suggesting a “new normal” of slow growth on the order of 2% will keep the Fed patient, and the Fed’s Beige Book, which reported slight-to-moderate growth for 10 of the 12 Fed districts, contributed to the slowdown narrative that drove some profit taking.

[…]

U.S. Treasuries saw increased buying interest, sending yields lower across the curve. The 2-yr yield declined four basis points to 2.51%, and the 10-yr yield declined three basis points to 2.69%. The U.S. Dollar Index finished flat at 96.86. WTI crude lost 0.5% to $56.25/bbl.

[…]

• For December, the trade deficit widened to $59.8 billion (Briefing.com consensus -$57.8 billion) from a downwardly revised $50.3 billion (from -$49.3 billion) in November. The December deficit is the widest since October 2008 when the world was in the throes of the worst financial crisis since the Great Depression.
o The key takeaway from the report is that it will fuel the Trump Administration’s fire to correct the trade imbalance with assertive policy actions.
• The ADP National Employment Report showed an increase of 183,000 in February (Briefing.com consensus 175,000), and the January reading was revised to 300,000 (from 213,000).
• The Federal Reserve’s Beige Book for March noted that ten Fed Districts reported slight-to-moderate growth while Philadelphia and St. Louis reported flat economic conditions. Consumer spending activity was described as mixed. Lower retail and auto sales were attributed to harsh winter weather and a higher cost of credit. Overall manufacturing activity increased while activity in the nonfinancial services sector increased at a modest-to-moderate pace.

  • 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) XLY (Cross-Over) Above
Consumer Staples Down SPY SPY Above
Energy Down XLE XLE Above
Materials Down SPY XLB (Cross-Over) Above
Industrials Down XLI XLI Above
Finance Down SPY (Cross-Under) SPY Above
Technology Down XLK (Cross-Over) XLK Above
Utility Under Pressure SPY XLU (Cross-Over) Above
Heath Care Down SPY SPY Cross-Under
Real Estate Down SPY (Cross-Under) SPY Cross-Under
Telecom Down XLT SPY (Cross-Under) Cross-Under

 

Print Friendly, PDF & Email

Leave a Reply