Morning Notes – Wednesday March 20, 2019

Directional Bias For The Day:

  • S&P Futures are unchanged; moving  down since 4:30 AM
  • Odds are for a down to sideways day – watch for break above 2842.50 for change of fortune
  • Key economic data due:
    • FOMC Statement at 2:00 PM
    • FOME Economic Projections at 2:00 PM
    • Fed Funds Rate at 2:00 PM
    • FOMC Press Conference at 2:30 PM

Markets Around The World

  • Markets in the East closed mostly down – Tokyo and Mumbai closed up
  • European markets are mostly lower – U.K. and Italy are up
  • Currencies:
    Up Down
    • Dollar index
    • EUR/USD
    • USD/CHF
    • AUD/USD
    • NZD/USD
    • USD/CAD
    • GBP/USD
    • USD/JPY
    • USD/INR
  • Commodities:
    Up Down
    • Gold
    • Platinum
    • Palladium
    • Crude Oil
    • NatGas
    • Silver
    • Copper
    • Sugar
    • Coffee
    • Cotton
    • Cocoa
  • Bonds
    • 10-yrs yield is at 2.591%, down from March 19 close of 2.614%;
    • 30-years is at 3.050%, down from 3.028%
    • 2-years yield is at 2.458%, down from 2.470%
    • The 10-Year-&-2-Year spread is at 0.133, down from 0.144

Key Levels:

  • Critical support levels for S&P 500 are 2823.27, 2818.26 and 2810.79
  • Critical resistance levels for S&P 500 are 2842.65, 2852.42 and 2856.32
  • Key levels for eMini futures: break above 2839.25, the high of 8:00 AM and break below 2833.25, the low of 8:30 AM


  • On Tuesday, at 4:00 PM, S&P future (June contract) closed at 2840.00 and the index closed at 2832.57 – a spread of about +7.50 points; futures closed at 2836.50 for the day; the fair value is +3.50
  • Pre-NYSE session open, futures price action is mixed – at 8:45 AM, S&P 500 futures were down by -0.25; Dow up by +5; and NASDAQ up by +2.75

Directional Bias Before Open

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

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 relatively small spinning top red candle with almost equal sized lower shadow and upper shadows;
    • %K is crossing below %D from above 90
    • Stochastic (70, 1, 3) Pop since February 11
    • RSI-9 is above 65; SMA8 of RSI-9 turned up
    • 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;  higher highs and higher lows since March 8; moving down since 12:00 PM on March 19
    • 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 just below 50 after bouncing off from 40
  • %K crossed above %D from below 10
  • At/below 20-bar EMA, which is above EMA10 of EMA50
  • Bias: Up-Side
30-Minute (e-mini future)
  • Trending up since  March 8; sequence of higher highs and higher lows is maintained but just barely; drifting down since 12:00 PM on March 19
  • RSI-9 is moving between 40 and 65; dipped below 40 but then bounced above it
  • %K crossed above %D from below 10; again crossing below it
  • At/above 20-bar EMA, below EMA10 of EMA50
  • Bias: Down-Side
15-Minute (e-mini future)
  • Bollinger Band (20, 2.0) is moving sideways since 9:45 PM; bias was up till 5:00 AM
  • The Bollinger Band was relatively narrow from 9:45 PM to 4:45 AM; expanding a bit since with price mostly trading the lower band
  • Stochastic (9, 1, 3): %K crossed below %D after touching 100 at 8:00 AM
  • Bias: Side

Previous Session

Major U.S. indices closed mostly lower on Tuesday, March 19 in mostly higher volume. NASDAQ Composite closed up slightly and Russell 2000 traded in lower volume. The early session’s lack-luster trading decidedly turned negative mid-day and then major indices mostly traded down.


The S&P 500 advanced as much as 0.7% on Tuesday, bolstered by dovish expectations ahead of the Federal Reserve’s policy decision on Wednesday. Conflicting U.S-China trade headlines, however, induced some profit-taking interest after a recent stretch of gains, as did a late-day slide in oil prices, which hit their highs for the year earlier in the session. The S&P 500 was down as much as 0.3% but managed to close near its flat line.

The Dow Jones Industrial Average (-0.1%) and the Russell 2000 (-0.6%) finished lower after being up as much as 0.8% and 0.5%, respectively. The Nasdaq Composite finished higher by 0.1% after being up as much as 0.7%.

The S&P 500 utilities (-1.2%), financials (-0.8%), and industrial (-0.4%) sectors underperformed the broader market. Conversely, the health care (+0.8%), consumer discretionary (+0.5%), and information technology (+0.2%) sectors were the lone groups to finish with gains.


U.S. Treasuries closed on a lower note, pushing yields slightly higher. The 2-yr yield and the 10-yr yield increased one basis point each to 2.46% and 2.61%, respectively. The U.S. Dollar Index declined 0.2% to 96.37. WTI crude increased 0.1% to $59.34/bbl.

Reviewing Tuesday’s lone economic report, Factory Orders for January:
• Factory orders increased 0.1% in January ( consensus +0.2%) on the heels of an unrevised 0.1% increase in December.
o The key takeaway from the report is that business investment picked up, evidenced by a 0.8% increase in orders for nondefense capital goods excluding aircraft that followed a 0.8% decline in December. Shipments of those same goods also increased 0.8% in January, which will be a positive input for Q1 GDP forecasts.

  • 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 SPY Below
Heath Care Down SPY SPY Above
Real Estate Down SPY (Cross-Under) SPY Below
Telecom Down XLT SPY (Cross-Under) Above


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