Directional Bias For The Day:
- S&P Futures are lower; moving down since 6:30 AM; at a resistance-turned-support level
- Odds are for a sideways to down day with potential for a bounce – watch for break above 2827.25 for change of fortune
- Key economic data due:
- Philly Fed Manufacturing Index (13.7 vs. 4.6 est.; prev. -4.1) at 8:30 AM
- Unemployment Claims (221K vs. 226K est.; prev. 230K) at 8:30 AM
- CB Leading Index (est. 0.1%; prev. -0.1%) at 10:00 AM
Markets Around The World
- Markets in the East closed mostly up – Hong Kong was down; Tokyo and Mumbai were closed
- European markets are mostly lower – U.K. is up
- Dollar index
- Crude Oil
- 10-yrs yield is at 2.517%, down from March 20 close of 2.535%;
- 30-years is at 2.965%, down from 2.975%
- 2-years yield is at 2.404%, up from 2.400%
- The 10-Year-&-2-Year spread is at 0.113, down from 0.135
- Critical support levels for S&P 500 are 2812.43, 2805.74 and 2799.78
- Critical resistance levels for S&P 500 are 2834.58, 2843.54 and 2852.42
- Key levels for eMini futures: break above 2827.25, the high of 6:30 AM and break below 2813.75, the low of 8:30 AM
- On Wednesday, at 4:00 PM, S&P future (June contract) closed at 2829.50 and the index closed at 2824.23 – a spread of about +5.25 points; futures closed at 2827.00 for the day; the fair value is +2.50
- Pre-NYSE session open, futures price action is to the downside – at 9:15 AM, S&P 500 futures were down by -7.25; Dow by -61 and NASDAQ by -24.25
Directional Bias Before Open
- Weekly: Uptrend
- Daily: Up Under Pressure
- 120-Min: Side-Down
- 30-Min: Down
- 15-Min: Down
- 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 mostly lower on Wednesday, March 20 in mostly mixed volume. NASDAQ Composite closed up slightly. Dow Jones Transportation Average, NASDAQ Composite and Russell 2000 traded in higher volume. S&P 500 and Dow Jones Industrial Average traded in lower volume. The major indices are carving out a three-day evening star pattern, a break below Wednesday’s low will confirm it.
The S&P 500 declined as much as 0.7% on Wednesday, as an earnings warning from FedEx (FDX 175.07, -6.34, -3.5%) helped fuel economic growth concerns. The benchmark index then advanced as much as 0.4% after the Federal Reserve provided a series of updates coming out of its FOMC meeting that created an impression it has shifted even further to a dovish mindset. The knee-jerk buying interest cooled off, though, leaving the S&P 500 down 0.3% for the day.
The Dow Jones Industrial Average lost 0.6%, and the Russell 200 lost 0.8%. The Nasdaq Composite increased 0.1%, helped in part by gains from the mega-cap stocks.
The S&P 500 financial sector (-2.1%) was the day’s outright laggard, dragged lower by a sharp drop in U.S. Treasury yields following the FOMC announcements. Conversely, the communication services (+1.2%) and energy (+0.9%) sectors outperformed. The energy space benefited from oil prices ($60.20/bbl, +$0.86, +1.4%) setting a new yearly high following some bullish inventory data.
The Fed left the target range for the fed funds rate unchanged at 2.25-2.50%; signaled that it does not expect any rate hikes now in 2019 versus two rate hikes at the time of the December 2018 meeting; and said it will begin tapering its balance sheet in May with an end date of Sept. 30.
U.S. Treasury yields and the U.S. Dollar Index (95.95, -0.43, -0.5%) dropped on the dovish mindset. The 2-yr yield fell six basis points to 2.40%, and the 10-yr yield fell eight basis points to 2.54%. The curve-flattening trade weighed heavily on the financial sector, as a compression in spreads caused concerns that net interest margins will be weak for lenders.
- 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|
|Utility||Under Pressure||SPY||XLU (Cross-Over)||Below|
|Real Estate||Down||SPY (Cross-Under)||XLRE (Cross-Over)||Below|