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

Pre-Open

  • 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:

Monthly
  • 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
Weekly:
  • 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
Daily
  • 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.

From Briefing.com:

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 (Briefing.com 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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