Morning Notes – Monday March 18, 2019

Directional Bias For The Day:

  • S&P Futures are little changed; moving mostly sideways since 12:00 PM on Friday
  • Odds are for a sideways to an up day – watch for break below 2828.50 for change of fortune
  • No key economic data due:

Markets Around The World

  • Markets in the East closed up
  • European markets are mostly higher – Germany and Switzerland are down
  • Currencies:
    Up Down
    • Dollar index
    • USD/JPY
    • USD/CHF
    • USD/CAD
    • EUR/USD
    • GBP/USD
    • AUD/USD
    • NZD/USD
    • USD/INR
  • Commodities:
    Up Down
    • Crude Oil
    • NatGas
    • Palladium
    • Sugar
    • Cocoa
    • Gold
    • Silver
    • Copper
    • Platinum
    • Coffee
    • Cotton
  • Bonds
    • 10-yrs yield is at 2.602%, up from March 15 close of 2.593%;
    • 30-years is at 3.011%, down from 3.020%
    • 2-years yield is at 2.458%, up from 2.438%
    • The 10-Year-&-2-Year spread is at 0.144, down from 0.155

Key Levels:

  • Critical support levels for S&P 500 are 2818.26, 2810.79 and 2803.46
  • Critical resistance levels for S&P 500 are 2830.73, 2843.89 and 2862.08
  • Key levels for eMini futures: break above 2833.75, the high of 2:30 AM and break below 2828.50, the low of 6:00 AM


  • On Friday, at 4:00 PM, S&P future (June contract) closed at 2828.25 and the index closed at 2822.48 – a spread of about +5.75 points; futures closed at 2829.75 for the day; the fair value is -1.50
  • Pre-NYSE session open, futures price action is mixed – at 9:00 AM, S&P 500 futures were up by +0.50; Dow down by -54; and NASDAQ down by -5.50

Directional Bias Before Open

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

The trend and patterns on various time frames for S&P 500:

  • 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
  • The week ending on March 15 was a large Bullish Engulfing candle that followed the Bearish Engulfing candle of week before; almost no lower shadow and small upper shadow
    • Stochastics (9,1, 3) and RSI (14) turned up – %K crossed above %D from just below 75; RSI is again crossing above a downtrend line that it broke above once
    • The index is breaking above the 78.6% Fibonacci retracement of the decline from the high in early October 2018
  • Last week was up +79.41 or +2.9% and ATR is 83.12
  • Last week’s pivot point=2800.27, R1=2852.94, R2=2883.39; S1=2769.82, S2=217.15; R1 pivot level was breached
  • An up week; 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
  • Uptrend
  • A green candle with almost no lower shadow and small upper shadow;
    • %K is above %D and near 90
    • Stochastic (70, 1, 3) Pop since February 11
    • RSI-9 is above 65; SMA8 of RSI-9 is trending down since February 27
    • The sequence of lower highs and lower lows since October 3, 2018 is broken
  • Above 20-day EMA, 50-day EMA, 100-DAY SMA and 200-day SMA
  • Uptrend
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; moving essentially sideways since12:00 PM on Wednesday
    • 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 above 50 since March 8
  • Above 20-bar EMA, which is above EMA10 of EMA50
  • Bias: Up
30-Minute (e-mini future)
  • Trending up since  March 8
  • RSI-9 is moving between 40 and 65
  • At/above 20-bar EMA, which is above EMA10 of EMA50
  • Bias: Up-Side
15-Minute (e-mini future)
  • Bollinger Band (20, 2.0) is moving sideways to up since 3:15 AM
  • The Bollinger Band narrowed from 3:15 AM to 5:30 AM;
  • Stochastic (9, 1, 3): %K crossed above %D from below 10 at 9:15 AM; above 80
  • Bias: Up-Side

Previous Session

Major U.S. indices closed mostly higher on Friday, March 15 in higher volume. Dow Jones Transportation Average closed lower. Most major indices are breaking above October 2018 high resistance. DJIA, DJT and Russell 2000 are still below their resistance levels.

For the week, U.S. indices closed higher in mixed volume. S&P 500 and Russell 2000 traded in lower volume for the week. Industrial is the only S&P sector that closed down during the week.


The S&P 500 gained 2.9% this week in a buy-the-dip trade that was supported by a sidelined Federal Reserve, persistently low U.S. Treasury yields, and a weakening dollar. In addition, key leadership from Apple (AAPL) and semiconductor stocks helped the S&P 500 set a new high for 2019 and close at its highest level since Oct. 10.

The Dow Jones Industrial Average gained 1.6%, Nasdaq Composite gained 3.8%, and the Russell 2000 gained 2.1%.

10 of the 11 S&P 500 sectors finished notably higher with gains ranging from 1.8% (utilities) to 4.9% (information technology). The industrials sector underperformed with a gain 0.3%.


Soft economic data throughout the week contributed to the belief the Fed will stay put, which helped keep U.S. Treasury yields at persistently low levels.

The 2-yr yield remained unchanged at 2.44%, and the 10-yr yield declined four basis points to 2.59% — both near their lows for the year. The lower rates, along with a patient Fed, remained a supportive consideration for risk assets.


Elsewhere, UK Prime Minster May’s plan for Brexit did not win approval in the British Parliament, yet Parliament did vote in favor of extending the Brexit deadline until June 30 at the latest. Lawmakers still need to agree on an alternate deal, and the delay still needs to be approved by all 27 member states of the European Union.

  • 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 SPY Above
Industrials Down XLI SPY (Cross-Under) Below
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 Above
Real Estate Down SPY (Cross-Under) SPY Above
Telecom Down XLT SPY (Cross-Under) Above


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