Morning Notes – Friday April 5, 2019

Directional Bias For The Day:

  • S&P Futures are higher; moving sideways since 10:00 PM on April 2 within a narrow range between 2889.00 and 2874.00;
  • Awaiting the Non-Farm Payroll report, which will set the tone for the rest of day’s trading
  • The bias is to the upside and break above 2889.00 will be bullish; similarly a break below 2874.00 will be bearish
  • Key economic data due:
    • Non-Farm Employment ( est. 172K; prev. 20K) at 8:30 AM
    • Average Hourly Earnings ( est. 0.3%; prev. 0.4%) at 8:30 AM
    • Unemployment Rate ( est. 3.8%; prev. 3.8%) at 8:30 AM

Markets Around The World

  • Markets in the East closed mostly higher – Sydney closed down; Shanghai and Hong Kong were closed for trading
  • European markets are mostly higher – Spain and Switzerland are down
  • Currencies:
    Up Down
    • EUR/USD
    • GBP/USD
    • USD/JPY
    • USD/CHF
    • AUD/USD
    • USD/CAD
    • USD/INR
    • Dollar index
    • NZD/USD
  • Commodities:
    Up Down
    • Gold
    • Silver
    • Copper
    • Platinum
    • Cotton
    • Crude Oil
    • NatGas
    • Palladium
    • Sugar
    • Coffee
    • Cocoa
  • Bonds
    • 10-yrs yield closed at 2.512%, down from April 3 close of 2.517%;
    • 30-years is at 2.922%, down from 2.929%
    • 2-years yield is at 2.335%, down from 2.339%
    • The 10-Year-&-2-Year spread is at 0.17, down from 0.178

Key Levels:

  • Critical support levels for S&P 500 are 2867.14, 2858.75 and 2848.63
  • Critical resistance levels for S&P 500 are 2881.28, 2886.02 and 2904.47
  • Key levels for eMini futures: break above 2888.50, the high of 2:30 AM and break below 2880.75, the low of 7:30 PM on Thursday


  • On Thursday, at 4:00 PM, S&P future (June contract) closed at 2883.00 and the index closed at 2879.39 – a spread of about +3.50 points; futures closed at 2882.75 for the day; the fair value is +0.25
  • Pre-NYSE session open, futures are higher – at 7:00 AM, S&P 500 futures were up by +4.75; Dow by +31 and NASDAQ by +16.00

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 green candle just above Wednesday’s close with small lower and smaller upper shadows; within the highs and lows of previous day’s candle
    • %K is crossing above %D from above 90;
    • Stochastic (70, 1, 3) Pop since February 11
    • RSI-9 flattening near 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)
  • Uptrend continues; moving sideways to up 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; broke above a downtrend line; above 60; made Bearish Divergence at 10:00 AM on April 3
  • %K is crossing below %D from above 80; formed Bearish Divergence on Monday
  • 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 April 1 within a high of 2889.00 and low of 2869.00
  • RSI-9 moving between 40 and 65 since 9:00 AM on April 3; made Bearish Divergence at 11:30 AM on Wednesday
  • %K is crisscrossing %D near 20;
  • 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 up since 0:00 AM
  • The Bollinger Band is narrow since 0:45 AM
  • Stochastic (9, 1, 3): %K crossed above %D at 6:15 AM following a Spike; near 80
  • Bias: Side

Previous Session

Major U.S. indices closed mostly higher on Thursday, April 4 in subdued trading with lower volume. NASDAQ Composite closed lower. The day’s range was small and the price action reflected the pause before Friday’s payroll report.


The S&P 500 increased 0.2% on Thursday, wavering between small gains and losses as high-level trade talks continued in Washington. The benchmark index advanced for the sixth straight session, eking out a new closing high for the year.

The Dow Jones Industrial Average gained 0.6%, boosted by shares of Boeing (BA 395.86, +11.12, +2.9%) on reports of a successful test of the software fix for the 737 MAX plane, which could be implemented in the coming weeks. The small-cap Russell 2000 gained 0.4%, while the tech-sensitive Nasdaq Composite lost 0.1%.

The S&P 500 materials (+1.0%), energy (+0.9%), and consumer discretionary (+0.7%) sectors led the broader market higher. Conversely, the information technology (-0.4%), utilities (-0.4%), and real estate (-0.3%) sectors underperformed.


U.S. Treasuries finished mixed ahead of Friday’s release of the Employment Situation report for March. The 2-yr yield increased one basis point to 2.33%, and the 10-yr yield decreased one basis point to 2.51%. The U.S. Dollar Index increased 0.2% to 97.26. WTI crude lost 0.3% to $62.24/bbl.


• Initial claims for the week ending March 30 decreased by 10,000 to 202,000 ( consensus 217,000) while continuing claims for the week ending March 23 fell by 38,000 to 1.717 million.
o The key takeaway from the report is that it suggests employers are reluctant to let go of employees. That is a positive consideration in terms of the economic outlook since feelings of job security help fuel increased consumer spending activity.

  • 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) SPY (Cross-Under) Above
Telecom SPY (Cross-Under) SPY Above


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