Morning Notes – Wednesday April 3, 2019

Directional Bias For The Day:

  • S&P Futures are higher; drifting up since 8:00 AM
  • Odds are for an up day – watch for break below 2873.00 for change of fortune
  • Key economic data due:
    • ADP Non-Farm Employment Change ( est. 184K; prev. 183K) at 8:15 AM
    • ISM Non-Manufacturing PMI ( est. 58.1; prev. 59.7) at 10:00 AM

Markets Around The World

  • Markets in the East closed mostly higher – Mumbai closed lower
  • European markets are mostly up – Switzerland is down
  • Currencies:
    Up Down
    • EUR/USD
    • GBP/USD
    • USD/JPY
    • AUD/USD
    • NZD/USD
    • Dollar index
    • USD/CHF
    • USD/CAD
    • USD/INR
  • Commodities:
    Up Down
    • Crude Oil
    • NatGas
    • Gold
    • Silver
    • Copper
    • Platinum
    • Sugar
    • Cotton
    • Coffee
    • Palladium
    • Cocoa
  • Bonds
    • 10-yrs yield closed at 2.481%, down from April 1 close of 2.497%;
    • 30-years is at 2.888%, down from 2.890%
    • 2-years yield is at 2.306%, down from 2.338%
    • The 10-Year-&-2-Year spread is at 0.175, up from 0.159

Key Levels:

  • Critical support levels for S&P 500 are 2858.75, 2848.63 and 2836.03
  • Critical resistance levels for S&P 500 are 2880.23, 2886.02 and 2904.47
  • Key levels for eMini futures: break above 2884.00, the high of 4:00 AM and break below 2878.50, the low of 0:30 AM


  • On Tuesday, at 4:00 PM, S&P future (June contract) closed at 2871.50 and the index closed at 2867.24 – a spread of about +4.25 points; futures closed at 2867.00 for the day; the fair value is +4.50
  • Pre-NYSE session open, futures are higher – at 7:30 AM, S&P 500 futures were up by +16.25; Dow by +117 and NASDAQ by +49.00

Directional Bias Before Open

  • Weekly: Uptrend
  • Daily: Uptrend
  • 120-Min: Up
  • 30-Min: Up
  • 15-Min: Up-Side
  • 6-Min: Up-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 doji like green candle near Monday’s close with small upper and lower shadows
    • %K is above %D following a spike near 30;
    • Stochastic (70, 1, 3) Pop since February 11
    • RSI-9 turning up from just above 50; above 65; SMA8 of RSI-9 flattening
    • 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)
  • Continuing the trend up following a sideways move at the start of the week;
    • Broke above symmetrical or descending triangle on March 28; 61.8% extension target near is achieved; the 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 moving up since 4:00 PM on Tuesday after declining from high on 83.71 reached on Monday; just below 70; potential Bearish Divergence emerging
  • %K is crossing below %D from above 80; potential Bearish Divergence
  • Above 20-bar EMA, which is above EMA10 of EMA50
  • Bias: Up
30-Minute (e-mini future)
  • Moving up since 11:30 AM on March 27; drifting up since 10:00 PM on Tuesday in a narrow range
  • RSI-9 is declining since 3:00 AM from 68.74; below 65; potential Bearish Divergence
  • %K is below %D; potential Bearish Divergence
  • Above 20-bar EMA, which is above EMA10 of EMA50
  • Bias: Up
15-Minute (e-mini future)
  • Bollinger Band (20, 2.0) is moving sideways to up since 1:45 AM
  • The Bollinger Band is narrow since 1:15 AM
  • Stochastic (9, 1, 3): %K is above %D; making a Spike up
  • Bias: Up-Side

Previous Session

Major U.S. indices closed mostly lower on Tuesday, April 2 in mostly lower volume. S&P 500 and NASDAQ Composite advanced a little. Dow Jones Transportation Average traded in higher volume. The day’s price action was muted and indecisive. Most made doji and harami like candles.


The S&P 500 finished flat on Tuesday in a lackluster trading session. Price action was relatively muted for most of the day, as investors digested a 2.2% gain for the benchmark index over the prior three sessions.

The Dow Jones Industrial Average lost 0.3%, weighed down by Walgreens Boots Alliance (WBA 55.36, -8.13, -12.8%) after it issued disappointing earnings results and guidance. The Nasdaq Composite gained 0.3%, boosted by Facebook (FB 174.20, +5.50, +3.3%) after it received some positive commentary from Deutsche Bank regarding its e-commerce potential.

The S&P 500 consumer staples (-0.8%) and energy (-0.7%) sectors were Tuesday’s outright laggards. Conversely, the real estate (+0.9%), communication services (+0.4%), and materials (+0.4%) sectors outperformed.


U.S. Treasuries closed on a higher note, pushing yields slightly lower. The 2-yr yield decreased one basis point to 2.31%, and the 10-yr yield decreased two basis points to 2.48%. The U.S. Dollar Index increased 0.1% to 97.33. WTI crude rose 1.6% to $62.58/bbl, hitting a new five-month high.


• New orders for durable goods declined 1.6% in February ( consensus -0.9%), pressured by a 4.8% drop in transportation equipment orders. Excluding transportation, new orders for durable goods were up 0.1% ( consensus +0.2%).
o The key takeaway from the report is that business spending was sluggish in February, evidenced by the 0.1% decline in nondefense capital goods orders excluding aircraft. Shipments of those same goods were flat. This is a line item that fits a slower growth outlook.

  • S&P 500 Sectors
Sector Relative Strength (Last Month – March) Relative Strength (April) %K vs. %D (April)
Consumer Discretionary XLY (Cross-Over) XLY Above
Consumer Staples XLP (Cross-Over) SPY (Cross-Under) Above
Energy SPY (Cross-Under) SPY Above
Materials SPY XLB (Cross-Over) Above
Industrials SPY (Cross-Under) SPY Above
Finance SPY XLF (Cross-Over) Above
Technology XLK XLK Above
Utility XLU (Cross-Over) SPY (Cross-Under) Below
Heath Care SPY SPY Below
Real Estate XLRE (Cross-Over) XLRE Above
Telecom SPY (Cross-Under) SPY Above


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