Morning Notes – Thursday April 4, 2019

Directional Bias For The Day:

  • S&P Futures are little changed; moving sideways since NYSE close on Wednesday
  • Odds are for a sideways day – watch for break below 2883.00 and break below 2874.00 for clarity
  • Key economic data due:
    • Unemployment Claims ( est. 215K; prev. 211K) at 8:30 AM

Markets Around The World

  • Markets in the East closed mixed – Shanghai, Tokyo, Seoul and Singapore closed higher; Hong Kong, Sydney and Mumbai closed lower
  • European markets are mostly down – Germany and Spain are up
  • Currencies:
    Up Down
    • Dollar index
    • GBP/USD
    • USD/CHF
    • AUD/USD
    • NZD/USD
    • USD/CAD
    • USD/INR
    • EUR/USD
    • USD/JPY
  • Commodities:
    Up Down
    • Crude Oil
    • NatGas
    • Gold
    • Platinum
    • Palladium
    • Sugar
    • Cotton
    • Coffee
    • Cocoa
    • Silver
    • Copper
  • Bonds
    • 10-yrs yield closed at 2.517%, up from April 2 close of 2.481%;
    • 30-years is at 2.929%, up from 2.888%
    • 2-years yield is at 2.339%, up from 2.306%
    • The 10-Year-&-2-Year spread is at 0.178, up from 0.175

Key Levels:

  • Critical support levels for S&P 500 are 2865.17, 2858.75 and 2848.63
  • Critical resistance levels for S&P 500 are 2880.69, 2886.02 and 2904.47
  • Key levels for eMini futures: break above 2883.00, the high of 9:30 PM on Wednesday and break below 2874.00, the low of 4:30 AM


  • On Wednesday, at 4:00 PM, S&P future (June contract) closed at 2876.50 and the index closed at 2873.40 – a spread of about +3.00 points; futures closed at 2879.75 for the day; the fair value is -3.25
  • Pre-NYSE session open, futures are little changed – at 7:00 AM, S&P 500 futures were down by -0.75; Dow up by +2 and NASDAQ down by -5.00

Directional Bias Before Open

  • Weekly: Uptrend
  • Daily: Uptrend
  • 120-Min: Up-Side
  • 30-Min: 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 doji like red real bodied candle just above Tuesday’s close with small upper and lower shadows
    • %K is crossing below %D from above 90;
    • Stochastic (70, 1, 3) Pop since February 11
    • RSI-9 flattening just below 70; SMA8 of RSI-9 is turning up
    • 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; moving sideways since 10:00 PM on April 2;
    • Broke above symmetrical or descending triangle on March 28; 100% extension target near 2890.00 is achieved; 161.8% extension target is near 2935.00
    • 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 trending down since 2:00 PM on April 1; just above 50; made Bearish Divergence emerging at 10:00 AM on April 3
  • %K is crossing above %D from near 40; formed Bearish Divergence on Monday
  • At/above 20-bar EMA, which is above EMA10 of EMA50
  • Bias: Up-Side
30-Minute (e-mini future)
  • Moving sideways since 9:30 AM on April1 within a high of 2889.00 and low of 2869.00
  • RSI-9 moving along 50 since 11:00 PM on Wednesday; made Bearish Divergence at 11:30 AM on Wednesday
  • %K is crisscrossing %D higher;
  • At/above 20-bar EMA, which is at/above EMA10 of EMA50
  • Bias: Side
15-Minute (e-mini future)
  • Bollinger Band (20, 2.0) is moving sideways to down since 9:30 PM
  • The Bollinger Band is narrow since 3:30 AM
  • Stochastic (9, 1, 3): %K is crisscrossing %D higher from near 30 since 4:30 AM
  • Bias: Side

Previous Session

Major U.S. indices closed higher on Wednesday, April 3 in mostly higher volume. Dow Jones Transportation Average traded in lower volume. The day’s price action was range bound and indecisive. Most indices made doji and harami like candles.


The S&P 500 advanced as much as 0.6% on Wednesday amid optimism about a U.S.-China trade deal and positive PMI non-manufacturing data out of China and Europe. The benchmark index fell into negative territory in afternoon action, however, succumbing to some selling interest after coming within 50 points of its all-time high. The S&P 500 managed to finish higher by 0.2%.

The Nasdaq Composite gained 0.6%, propped up by many components within the Philadelphia Semiconductor Index (+2.3%), which rallied on some positive industry indications. The Dow Jones Industrial Average gained 0.2%, and the Russell 2000 gained 0.5%.

The S&P 500 materials (+1.3%), information technology (+0.8%), and consumer discretionary (+0.7%) sectors outperformed the broader market. Conversely, the energy (-1.0%), consumer staples (-0.6%), and industrial (-0.3%) sectors underperformed.


U.S. Treasuries closed on a lower note, pushing yields higher in a curve-steepening trade. The 2-yr yield increased one basis point to 2.32%, and the 10-yr yield increased four basis points to 2.52%. The U.S. Dollar Index declined 0.3% to 97.11. WTI crude lost 0.3% to $62.42/bbl.


• The ISM Non-Manufacturing Index (NMI) for March dropped to 56.1% ( consensus 57.9%) from 59.7% for February. The dividing line between expansion and contraction is 50.0%. The March reading is the lowest level for the index since December 2017.
o The key takeaway from the report is that every index component was at 50.0% or higher in March. The drop in March, then, suggests non-manufacturing sector activity increased, only at a slower pace than the prior month.
• ADP Employment Change report for March showed an estimated 129,000 positions were added to private-sector payrolls ( consensus 178,000) following an upwardly revised 197,000 (from 183,000) for February.
• The weekly MBA Mortgage Applications Index surged 18.6% following an 8.9% increase in the prior week.

  • 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) Below
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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