Morning Notes – Wednesday March 13, 2019

Directional Bias For The Day:

  • S&P Futures are higher; moving up since 10:30 PM on Tuesday
  • Odds are for an up day – watch for break below 2797.75 for change of fortune
  • Key economic data due:
    • Core PPI (0.1% vs. 0.2% est.; prev. 0.3%) at 8:30 AM
    • PPI  (0.1% vs. 0.2% est.; prev. -0.1% ) at 8:30 AM
    • Core Durable Goods Orders (-0.1% vs. 0.1% est.; prev. 0.3%) at 8:30 AM
    • Durable Goods Orders (0.4$ vs. -0.5% est.; prev. 1.3%) at 8:30 AM
    • Construction Spending (e.5%) at 10:00 AM
    • U.K. Parliament Brexit Vote – sometime today

Markets Around The World

  • Markets in the East closed mostly down – Mumbai was up
  • European markets are higher
  • Currencies:
    Up Down
    • EUR/USD
    • GBP/USD
    • USD/JPY
    • USD/CAD
    • Dollar index
    • USD/CHF
    • AUD/USD
    • NZD/USD
    • USD/INR
  • Commodities:
    Up Down
    • Crude Oil
    • Gold
    • Silver
    • Copper
    • Platinum
    • Palladium
    • Cocoa
    • Cotton
    • NatGas
    • Sugar
    • Coffee
  • Bonds
    • 10-yrs yield is at 2.624%, down from March 12 close of 2.627%;
    • 30-years is at 3.015%, unchanged
    • 2-years yield is at 2.455%, unchanged
    • The 10-Year-&-2-Year spread is at 0.169, down from 0.172

Key Levels:

  • Critical support levels for S&P 500 are 2787.84, 2773.82 and 2747.61
  • Critical resistance levels for S&P 500 are 2798.32, 2806.27 and 2816.88
  • Key levels for eMini futures: break above 2806.00, the high of 8:00 AM and break below 2797.75, the low of 5:30 AM

Pre-Open

  • On Tuesday, at 4:00 PM, S&P future (June contract) closed at 2797.25 and the index closed at 2791.52 – a spread of about +5.75 points; futures closed at 2797.25 for the day; the fair value is +0.00
  • Pre-NYSE session open, futures price action is to the upside – at 8:45 AM, S&P 500 futures were up by +6.25; Dow by +76; and NASDAQ by +22.50

Directional Bias Before Open

  • Weekly: Uptrend
  • Daily: Up Under Pressure
  • 120-Min: Up
  • 30-Min: Side-Up
  • 15-Min: Side-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 March 8 was a large bearish engulfing candle with large lower shadow and almost no upper shadow
    • Stochastics (9,1, 3) and RSI (14) turned down – %K is below %D from above 95; RSI has crossed below a downtrend line that it broke above once
    • The index is turning down from 78.6% Fibonacci retracement of the decline from the high in early October 2018
  • Last week was down -60.62 or -2.2% and ATR is 94.61
  • Last week’s pivot point=2760.74, R1=2799.21, R2=2855.35; S1=2704.60, S2=2666.13; S1/S2/S3 pivot levels were breached; last time all three support levels were breached was the week ending on December 21, 2018 and the next week was up; seven out of last nine times when all three support levels were breached the following week was an up week
  • A down week; first in last five weeks and second 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 small green candle that gapped up at the open; almost no lower shadow and small upper shadow;
    • %K is above %D and near 70
    • Stochastic (70, 1, 3) Pop since February 11
    • RSI-9 is near 60
    • 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, 100-DAY SMA and 200-day SMA
  • Uptrend Under Pressure
2-Hour (e-mini future)
  • Trending up from a low of 2726.50 at 10:00 AM on March 8; broke above the downtrend line from early March high; higher highs and higher lows since March 8
    • 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 declined from above 80 to near 50; rising since 8:00 PM on March 12; broke above a downtrend line
  • Above 20-bar EMA, which is above EMA10 of EMA50
  • Bias: Up
30-Minute (e-mini future)
  • Breaking above a horizontal trading range between 2802.75 and 2785.50
  • RSI-9 is moving up since 10:00 PM on Tuesday
  • Above 20-bar EMA, which is above EMA10 of EMA50
  • Bias: Side-Up
15-Minute (e-mini future)
  • Bollinger Band (20, 2.0) is moving sideways to up since 8:00 PM on Monday
  • The Bollinger Band was relatively narrow from 1:30 AM to 4:15 AM; expanding since with price walking up the upper band
  • Stochastic (9, 1, 3): %K crisscrossing %D around 70
  • Bias: Side-Up

Previous Session

Major U.S. indices closed mostly higher on Tuesday, March 12 in mostly higher volume. Dow Jones Industrial Average and Dow Jones Transportation Average closed down and Russell 2000 traded in lower volume. Most indices made relatively small candle with small upper shadows and smaller lower shadows.

From Briefing.com:

The S&P 500 gained 0.3% on Tuesday, adding to its strong start to the week. Softening inflation data, persistently low U.S. Treasury yields, and leadership from Apple (AAPL 180.91, +2.01, +1.1%) and Alphabet (GOOG 1193.20, +17.44, +1.5%), helped the market overcome continued weakness in Boeing (BA 375.41, -24.60, -6.2%).

The Nasdaq Composite gained 0.4%, and the Russell 2000 gained 0.1%.
The Dow Jones Industrial Average lost 0.4% amid Boeing’s notable problems pertaining to the grounding of its 737 MAX by several countries, as well as the European Union.

[…]

The S&P 500 health care (+0.7%), utilities (+0.6%), energy (+0.6%), and communication services (+0.6%) sectors led Tuesday’s advance. Conversely, the industrials (-0.9%) and consumer staples (unch) sectors underperformed.
The broader market began the day modestly higher, supported by a soft Consumer Price Index (CPI) for February.

[…]

The soft data prompted further strength in the U.S. Treasury market, which sent yields even lower.

The 2-yr yield declined three basis points to 2.44%, and the 10-yr yield declined four basis points to 2.61%.

[…]

• Total CPI was up 0.2% month-over-month in February, as expected, while core CPI, which excludes food and energy, was up only 0.1% (Briefing.com consensus +0.2%).
o The key takeaway from the report is that inflation trends for total CPI and core CPI both moved lower on a year-over-year basis. Total CPI was up 1.5%, versus 1.6% for the 12 months ending in January, whereas, core CPI was up 2.1%, versus 2.2% for the 12 months ending in January. The disinflation will indeed keep the Fed in a patient state of mind.
• The NFIB Small Business Optimism Index for February increased to 101.7 from the prior reading of 101.2 in January.

[…]

  • 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
Consumer Staples Down SPY SPY Above
Energy Down XLE SPY (Cross-Under) Above
Materials Down SPY XLB (Cross-Over) Above
Industrials Down XLI SPY (Cross-Under) 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) XLRE (Cross-Over) Above
Telecom Down XLT SPY (Cross-Under) Above

 

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