Morning Notes – Tuesday March 26, 2019

Directional Bias For The Day:

  • S&P Futures are higher; moving mostly up since 2:00 PM on Monday;
  • Odds are for an up to a sideways day with elevated volatility  – watch for break above 2823.75 and break below 2809.25 for clarity
  • Key economic data due:
    • Building Permits (1.30M vs. 1,32M est.; prev. 1.32M) at 8:30 AM
    • Housing Starts (1.16M vs. 1.22M est.; prev. 1.27M) at 8:30 AM
    • S&P/ CS Composite-20 HPI (-3.6% vs. 4.3% est.; prev. 4.1%) at 9:00 AM
    • CB Consumer Confidence (est. 132.1; prev. 131.4) at 10:00 AM

Markets Around The World

  • Markets in the East closed mostly higher – Shanghai was down
  •  European markets are up
  • Currencies:
    Up Down
    • Dollar index
    • GBP/USD
    • USD/JPY
    • USD/CHF
    • AUD/USD
    • USD/CAD
    • EUR/USD
    • NZD/USD
    • USD/INR
  • Commodities:
    Up Down
    • Crude Oil
    • NatGas
    • Sugar (unch.)
    • Coffee
    • Cocoa
    • Gold
    • Silver
    • Copper
    • Platinum
    • Palladium
    • Cotton
  • Bonds
    • 10-yrs yield is at 2.435%, up from March 25 close of 2.420%;
    • 30-years is at 2.889%, up from 2.867%
    • 2-years yield is at 2.270%, up from 2.241%
    • The 10-Year-&-2-Year spread is at 0.165, down from 0.179

Key Levels:

  • Critical support levels for S&P 500 are 2796.17, 2785.02, and 2777.96
  • Crtical resistance levels for S&P 500 are 2823.28, 2838.04 and 2846.16
  • Key levels for eMini futures: break above 2823.75, the high of 8:00 AM and break below 2809.25, the low of 4:30 AM

Pre-Open

  • On Monday, at 4:00 PM, S&P future (June contract) closed at 2803.50 and the index closed at 2798.38 – a spread of about +5.00 points; futures closed at 2807.00 for the day; the fair value is -3.50
  • Pre-NYSE session open, futures price action is to the upside – at 9:00 AM, S&P 500 futures were up by +12.00; Dow by +133 and NASDAQ by +37.00

Directional Bias Before Open

  • Weekly: Uptrend
  • Daily: Uptrend Under Pressure
  • 120-Min: Down-Side
  • 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 22 was a shooting star type of candle with long upper shadow and almost no lower shadow
    • Stochastics (9,1, 3) and RSI (14) turned down – %K crossed below %D from above 90 and potentially making a Bearish Divergence;
    • RSI is again crossing below a downtrend line that it broke above once
    • The index has broken above the 78.6% Fibonacci retracement of the decline from the high in early October 2018
  • Last week was down -21.77 or -0.8% and ATR is 59.84
  • Last week’s pivot point=2820.50, R1=2840.52, R2=2880.34; S1=2780.68, S2=2760.66; R1 pivot level was breached
  • A down week; second in last five weeks and third 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 small doji red candle that gapped down at the open but then closed the gap; the upper and lower shadow are almost equal sized
    • %K is below %D; below 20; made Bearish Divergence on March 21
    • Stochastic (70, 1, 3) Pop since February 11
    • RSI-9 is falling; just below 50; SMA8 of RSI-9 turning down
    • The sequence of lower highs and lower lows since October 3, 2018 is broken
  • At/above 20-day EMA; above 50-day EMA, 100-DAY SMA and 200-day SMA
  • Uptrend Under Pressure
2-Hour (e-mini future)
  • Bouncing up from a low of 2789.50 made at 2:00 PM on Monday after testing the prior lows; broke above congestion zone at 8:00 PM
    • 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 rising since 2:00 AM on Monday after making Bullish Divergence; just above 60
  • %K crossed below %D from below 80
  • Above EMA10 of EMA50 and 20-bar EMA, which below the slower moving average
  • Bias: Down-Side
30-Minute (e-mini future)
  • Moving up since 2:00 PM on March 25;
    • formed double-bottom and broke above it intermediate high at 5:30 AM; height is approximately 25 points; the 61.8% extension target is near 2831.00 and 100% extension target is near 2840.00
  • RSI-9 is trending up since 11:30 AM on March 22; made on Bullish Divergence on Monday; above 50
  • %K crossed below %D at 6:30 AM from above 80
  • 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 up since 4:30 PM on Monday
  • The Bollinger Band was relatively narrow from 1:00 AM to 5:00 AM; expanding since with price mostly walking up the upper band
  • Stochastic (9, 1, 3): %K crisscrossing %D and moving down from 100
  • Bias: Side-Up

Previous Session

Major U.S. indices closed mostly lower on Monday, March 25 in lower volume. Dow Jones Industrial Average and Russell 2000 closed up. Major indices made doji candle or similar candle near the close of Friday. Most had almost equal sized upper and lower shadows indicating indecision.

From Briefing.com:

The S&P 500 decreased 0.1% on Monday in a session that showed little conviction from buyers or sellers. Lingering concerns about global economic growth tempered buying interest and contributed to a further decline in U.S. Treasury yields.

The Nasdaq Composite also lost 0.1%. The Dow Jones Industrial Average and the Russell 2000 outperformed with gains of 0.1% and 0.5%, respectively.

The S&P 500 information technology (-0.4%) and financial (-0.4%) sectors dragged the broader market lower. Conversely, the consumer discretionary (+0.6%) and industrial (+0.2%) sectors outperformed.
Growth concerns were reinforced by another discouraging economic report from Germany. Germany’s ifo Business Climate Index for March showed a continued deterioration of the manufacturing sector, which was notable, given Germany’s status as a key export center.

U.S. Treasury yields steadily declined throughout the day on dwindling growth expectations. The 2-yr yield dropped seven basis points to 2.25%, and the 10-yr yield dropped four basis points to 2.42% after briefly touching 2.39% — its lowest level since Dec. 2017. The U.S. Dollar Index lost 0.1% to 96.53.

[…]

  • 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 SPY (Cross-Under) Above
Materials Down SPY SPY Above
Industrials Down XLI SPY (Cross-Under) Below
Finance Down SPY (Cross-Under) SPY Below
Technology Down XLK (Cross-Over) XLK Above
Utility Under Pressure SPY XLU (Cross-Over) Above
Heath Care Down SPY SPY Below
Real Estate Down SPY (Cross-Under) XLRE (Cross-Over) Below
Telecom Down XLT SPY (Cross-Under) Below

 

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