Morning Notes – Monday April 1, 2019

Directional Bias For The Day:

  • S&P Futures are higher; moving sideways since 8:15 PM on Sunday
  • Odds are for an up day, with high probability of sideways move from pre-NYSE levels – watch for break below 2854.50 for change of fortune
  • Key economic data due:
    • Core Retail Sales ( -0.4% vs. 0.4% est.; prev. 0.9%) at 8:30 AM
    • Retail Sales ( -0.2% vs. 0.3% est.; prev. 0.2%) at 8:30 AM
    • ISM Manufacturing ( prev. 54.2 ) at 10:00 AM

Markets Around The World

  • Markets in the East closed higher
  • European markets are up
  • Currencies:
    Up Down
    • EUR/USD
    • GBP/USD
    • USD/JPY
    • AUD/USD
    • NZD/USD
    • USD/CAD
    • USD/INR
    • Dollar index
    • USD/CHF
  • Commodities:
    Up Down
    • Crude Oil
    • NatGas
    • Gold
    • Silver
    • Copper
    • Platinum
    • Palladium
    • Cocoa
    • Sugar
    • Cotton
    • Coffee
  • Bonds
    • 10-yrs yield is at 2.442%, up from March 29 close of 2.414%;
    • 30-years is at 2.848%, up from 2.822%
    • 2-years yield is at 2.290%, up from 2.258%
    • The 10-Year-&-2-Year spread is at 0.152, down from 0.156

Key Levels:

  • Critical support levels for S&P 500 are 2836.03 2828.08 and 2819.23
  • Critical resistance levels for S&P 500 are 2854.87, 2860.31 and 2874.02
  • Key levels for eMini futures: break above 2861.25, the high of 4:30 AM and break below 2854.50, the low of 6:30 AM


  • On Friday, at 4:00 PM, S&P future (June contract) closed at 2838.00 and the index closed at 2834.40 – a spread of about +3.50 points; futures closed at 2837.75 for the day; the fair value is +0.25
  • Pre-NYSE session open, futures are higher – at 9:00 AM, S&P 500 futures were up by +20.25; Dow by +212 and NASDAQ by +68.75

Directional Bias Before Open

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

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

  • Under Pressure
  • March 2019 was a green spinning top candle with lower shadow larger than the upper shadow
  • Third up month in a row
  • Sequence of higher highs and higher lows since February 2016 is broken
  • The week ending on March 29 was a bullish engulfing candle with almost no upper shadow and small lower shadow
    • Stochastics (9,1, 3) and RSI (14) turned up – %K crossed above %D from just below 80;
    • RSI is again crossing above 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 up +33.69 or +1.2% and ATR is 51.01
  • Last week’s pivot point=2818.48, R1=2851.95, R2=2869.49; S1=2800.94, S2=2767.47; No pivot levels were breached
  • An up week; third in last five weeks and seventh in last ten weeks
  • Last swing low, 2532.69, was the low on February 5, 2018 and breached in December 2018, when a lower swing low of 2346,58; since then the high of 2815.15 is breached but the all time high is not
  • Above 10-week EMA and 39-week SMA; above 89-week SMA
  • Uptrend
  • A small green real body looking like a hammer; almost no upper shadow and longish lower shadow
    • %K is above %D following a spike near 30; made Bearish Divergence on March 21
    • Stochastic (70, 1, 3) Pop since February 11
    • RSI-9 turning up from just above 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
  • Above 20-day EMA; above 50-day EMA, 100-DAY SMA and 200-day SMA
  • Uptrend
2-Hour (e-mini future)
  • Moving sideways since 8:00 PM on Sunday
    • Broke above symmetrical or descending triangle on March 28; 61.8% extension target is near 2862.00 and 100% extension target is near 2890.00
    • 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 drifting up since 10:00 AM on March 27; drooping down since 2:00 AM
  • %K crisscrossing %D above 80
  • Above 20-bar EMA, which is above EMA10 of EMA50
  • Bias: Up-Side
30-Minute (e-mini future)
  • Moving sideways since 10:30 PM on Sunday in a narrow range
  • RSI-9 is drifting downs since 9:00 PM on Sunday
  • %K is crossing below %D near 50
  • 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 since 10:45 PM
  • The Bollinger Band is narrowed since 10:45 PM
  • Stochastic (9, 1, 3): %K is crisscrossing %D near 80
  • Bias: Side

Previous Session

Major U.S. indices closed higher on Friday, March 29 in higher volume. Indices gapped up at the open and maintained the gap despite some early decline. Most closed with almost no upper shadows and relatively small lower shadows.


The S&P 500 gained 0.7% on Friday, capping its best quarter since 2009 amid a risk-on sentiment and continued trade optimism. Friday’s advance propped the S&P 500 to a gain of 13.1% this quarter.

The Dow Jones Industrial Average (+0.8%), the Nasdaq Composite (+0.8%), and the Russell 2000 (+0.3%) extended their quarterly gains to 11.2%, 16.5%, and 14.2%, respectively.

The S&P 500 health care (+1.2%), industrials (+1.0%), and information technology (+1.0%) sectors outperformed the broader market. Conversely, the energy (-0.2%) and real estate (-0.1%) sectors were the lone groups to finish with losses.


U.S. Treasuries ended the week on a lower note, sending yields higher across the curve. The 2-yr yield increased four basis points to 2.27%, and the 10-yr yield increased three basis points to 2.41%. The U.S. Dollar Index increased 0.1% to 97.27.


• Personal income increased 0.2% in February ( consensus 0.3%) after decreasing 0.1% in January. Personal spending increased 0.1% in January ( consensus 0.3%) after decreasing a revised 0.6% (from -0.5%) in December.
• The PCE Price Index for January decreased 0.1% while the core PCE Price Index, which excludes food and energy, increased 0.1% ( consensus 0.2%). On a year-over-year basis, the PCE Price Index is up 1.4%, down from 1.8% in December, and the core PCE Price Index is up 1.8%, down from 2.0% in December.
o The key takeaway from the report is that the core PCE Price Index slipped below the Fed’s longer-run inflation target of 2.0%, which can be used by the FOMC as a reason for maintaining its newfound patient stance.
• New home sales increased 4.9% m/m in February to a seasonally adjusted annual rate of 667,000 ( consensus 618,000) from an upwardly revised 636,000 (from 607,000) in January. On a y/y basis, new home sales were up 0.6%.
o The key takeaway from the report is that a recent decrease in prices appears to have invited more sales activity.
• The final University of Michigan Index of Consumer Sentiment for March increased to 98.4 ( consensus 97.8) from 97.8 in the preliminary reading.
o The key takeaway from the report is that a large share of households reported rising incomes and lower expected year-ahead inflation rates, leading to increased real income expectations.
• The Chicago PMI increased to 58.7 in March from 64.7 in February.
Looking ahead, investors will receive Retail Sales for February, the ISM Manufacturing Index for March, Business Inventories for January, Construction Spending for February, and auto and truck sales throughout the day on Monday.

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


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