Morning Notes – Friday March 29, 2019

Directional Bias For The Day:

  • S&P Futures are higher; moving up since 6:30 AM after finding support at a pattern line that was broken earlier
  • Odds are for an up day – watch for break below 2822.00 for change of fortune
  • Key economic data due:
    • Core PCE Price Index (0.1% vs. 0.2% est.; prev. 0.2%) at 8:30 AM
    • Personal Spending (0.1% vs. 0.3% est.; prev. -0.5%) at 8:30 AM
    • Personal Income (0.2% vs. 0.3% est.; prev. -0.1% ) at 8:30 AM
    • Chicago PMI ( est. 61.1; prev. 64.7) at 9:45 AM
    • Revised UoM Consumer Sentiment (est. 97.8; prev. 97.8) at 10:00 AM

Markets Around The World

  • Markets in the East closed higher
  • European markets are up
  • Currencies:
    Up Down
    • Dollar index
    • USD/JPY
    • USD/CHF
    • AUD/USD
    • NZD/USD
    • USD/CAD
    • USD/INR
    • EUR/USD
    • GBP/USD
  • Commodities:
    Up Down
    • Crude Oil
    • Gold
    • Silver
    • Copper
    • Platinum
    • Palladium
    • Sugar
    • Cotton
    • Coffee
    • Cocoa
    • NatGas
  • Bonds
    • 10-yrs yield closed at 2.389%, up from March 27 close of 2.374%;
    • 30-years is at 2.811%, down from 2.821%
    • 2-years yield is at 2.282%, up from 2.266%
    • The 10-Year-&-2-Year spread is at 0.123, down from 0.168

Key Levels:

  • Critical support levels for S&P 500 are 2807.97, 2798.77 and 2787.72
  • Critical resistance levels for S&P 500 are 2825.56, 2829.71 and 2846.16
  • Key levels for eMini futures: break above 2834.00, the high of 7:00 AM and break below 2822.00, the low of 6:30 AM

Pre-Open

  • On Thursday, at 4:00 PM, S&P future (June contract) closed at 2820.00 and the index closed at 2815.44 – a spread of about +4.50 points; futures closed at 2821.00 for the day; the fair value is -1.00
  • Pre-NYSE session open, futures are higher – at 8:30 AM, S&P 500 futures were up by +10.50; Dow by +116 and NASDAQ by +32.00

Directional Bias Before Open

  • Weekly: Uptrend
  • Daily: Uptrend Under Pressure
  • 120-Min: Side
  • 30-Min: Up
  • 15-Min: Side-Up
  • 6-Min: Side-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 green spinning top harami candle within a small  bearish engulfing candle, which followed small spinning top
    • %K is turning above %D; just above 30; made Bearish Divergence on March 21
    • Stochastic (70, 1, 3) Pop since February 11
    • RSI-9 is oscillating near 50; made Bearish Divergence on March 21; SMA8 of RSI-9 pointing 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)
  • Moving sideways since 6:00 PM just above a symmetrical triangle that was broken at 2:00 PM on Thursday
    • 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 moving sideways since 6:00 PM near 55
  • %K crisscrossing %D above 80
  • Above 20-bar EMA, which is above EMA10 of EMA50
  • Bias: Side
30-Minute (e-mini future)
  • Moving up within an upsloping channel since 11:30 Am on March 27; near the upper bound; broke above symmetrical triangle; 61.8% extension target is 2848.00 near and 100% extension target is near 2865.00
  • RSI-9 is moving between 40 and 65 since 11:30 AM on March 27; near 60
  • %K is above %D; above 80
  • Above 20-bar EMA, which is above EMA10 of EMA50
  • Bias: Up
15-Minute (e-mini future)
  • Bollinger Band (20, 2.0) is drifting sideways since 8:00 PM
  • The Bollinger Band narrowed from 11:00 PM to 6:30 AM; expanding since with price walking up the upper band
  • Stochastic (9, 1, 3): %K is above %D above 80 but is declining
  • Bias: Side-Up

Previous Session

Major U.S. indices closed higher on Thursday, March 28 in lower volume. Most indices made small spinning top harami candles. Dow Jones Transportation Average and Russell 2000 made larger green real bodies.

From Briefing.com:

The S&P 500 increased 0.4% on Thursday, led by shares of the recently-battered financial and industrial stocks. Stocks drifted higher as Treasuries stabilized, while investors continued to wait for further clarity on a U.S.-China trade resolution, earnings guidance, and U.S. economic growth prospects.

The Dow Jones Industrial Average gained 0.4%, the Nasdaq Composite gained 0.3%, and the Russell 2000 gained 0.9%.

The S&P 500 materials (+1.0%), financials (+0.8%), and industrial (+0.8%) sectors outperformed the broader market. Conversely, the utilities (-1.3%) and communication services (-0.5%) sectors were the lone groups to finish with losses.

[…]

U.S. Treasuries edged lower, pushing yields higher. The 2-yr yield and the 10-yr yield increased two basis points each to 2.23% and 2.39%, respectively. The U.S. Dollar Index rose 0.5% to 97.24. WTI crude decreased 0.3% to $59.27/bbl.

[…]

• Initial claims for the week ending March 23 decreased by 5,000 to 211,000 (Briefing.com consensus 220,000) from the revised prior week level of 216,000 (from 221,000) while continuing claims for the week ending March 16 increased by 13,000 to 1.756 mln from the revised prior week level of 1.743 mln (from 1.750 mln).
o The key takeaway from the report is that initial claims have approached the lower end of range that has been in effect over the past year while continuing claims hover near the middle of their range from the past year.
• The third estimate for Q4 GDP showed a downward revision to 2.2% from 2.6% (Briefing.com consensus 2.5%) and a downward revision to the GDP Price Deflator to 1.7% from 1.8% (Briefing.com consensus 1.8%).
o The key takeaway from the report is that even with the downward revision, real GDP increased 3.0% from the fourth quarter of 2017 to the fourth quarter of 2018, down slightly from the previous estimate of 3.1%. Measured from the 2017 annual level to the 2018 annual level, real GDP increased 2.9%.
• Pending Home Sales decreased 0.1% in February (Briefing.com consensus 0.5%). Today’s reading follows a revised increase of 4.3% in January (from 4.6%).

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

 

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