Morning Notes – Tuesday April 9, 2019

Directional Bias For The Day:

  • S&P Futures are flat; moving sideways since 4:00 PM on Monday; within a trading range between 2899.50 and 2884.25 for past two days;
  • The odds are for a sideways to an up day – watch for break above 2900.00 and break below 2884.25 for clarity
  • No key economic data due:

Markets Around The World

  • Markets in the East closed mostly higher – Shanghai was lower
  • European markets are mostly higher – Germany is down
  • Currencies:
    Up Down
    • EUR/USD
    • GBP/USD
    • USD/CHF
    • AUD/USD
    • NZD/USD
    • Dollar index
    • USD/JPY
    • USD/CAD
    • USD/INR
  • Commodities:
    Up Down
    • Crude Oil
    • Gold
    • Silver
    • Copper
    • Palladium
    • Sugar
    • Coffee
    • Cotton
    • NatGas
    • Platinum
    • Cocoa
  • Bonds
    • 10-yrs yield closed at 2.519%, up from April 5 close of 2.501%;
    • 30-years is at 2.925%, up from 2.909%
    • 2-years yield is at 2.364%, up from 2.343%
    • The 10-Year-&-2-Year spread is at 0.155, down from 0.158

Key Levels:

  • Critical support levels for S&P 500 are 2890.17, 2884.64 and 2880.78
  • Critical resistance levels for S&P 500 are 2895.77, 2904.47 and 2909.64
  • Key levels for eMini futures: break above 2900.00, the high of 8:00 PM on Monday and break below 2893.25, the low of 2:00 AM

Pre-Open

  • On Monday, at 4:00 PM, S&P future (June contract) closed at 2898.75 and the index closed at 2895.77 – a spread of about +3.00 points; futures closed at 2898.25 for the day; the fair value is +0.50
  • Pre-NYSE session open, futures are lower – at 8:30 AM, S&P 500 futures were down by -7.25; Dow by -57 and NASDAQ by -20.75

Directional Bias Before Open

  • Weekly: Uptrend
  • Daily: Uptrend
  • 120-Min: 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 April 5 was a large green candle that gapped up from previous week’s bullish engulfing candle with almost no upper and lower shadows
    • Stochastics (9,1, 3) and RSI (14) are moving up – %K is above %D and near 100;
    • 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 +58.34 or +2.1% and ATR is 44.61
  • Last week’s pivot point=2878.20, R1=2907.78, R2=2922.81; S1=2863.17, S2=2833.59; R1/R2 pivot levels were breached
  • An up week; third in last five weeks and eight 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 with small lower and smaller upper shadows;
    • %K is above %D; nearing 100;
    • Stochastic (70, 1, 3) Pop since February 11
    • RSI-9 rising; above 70; SMA8 of RSI-9 is moving up
    • The sequence of higher highs and higher lows since December 26, 2018
  • Above 20-day EMA; above 50-day EMA, 100-DAY SMA and 200-day SMA
  • Uptrend
2-Hour (e-mini future)
  • 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 6:00 PM on April 5; made Bearish Divergence on April 5
  • %K is below %D from above 80; Bearish Divergence on Monday
  • Above 20-bar EMA, which is above EMA10 of EMA50
  • Bias: Side
30-Minute (e-mini future)
  • Moving sideways since 8:30 AM on April 8 within a high of 2899.50 and low of 2884.25
  • RSI-9 moving between 40 and 65 since 9:00 AM on April 3; made Bearish Divergence at 4:00 PM on Monday
  • %K is below %D near 50;
  • 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 since 1:30 AM
  • The Bollinger Band is narrow since 1:30 AM
  • Stochastic (9, 1, 3): %K is below %D since 5:30 AM from above 80; near 50
  • Bias: Side

Previous Session

Major U.S. indices closed mostly higher on Monday, April 8 in another subdued trading with mostly lower volume. Dow Jones Industrial Average and Russell 2000 closed lower. Dow Jones Transportation Average traded in higher volume. The major indices are showing mostly an up bias and the volatility index, $VIX, is at 13.40, which indicate that the current grind up would continue.

From Briefing.com:

The S&P 500 declined as much as 0.4% in the opening minutes of trading on Monday, weighed down by shares of widely-held stocks like Boeing (BA 374.52, -17.41, -4.4%) and General Electric (GE 9.49, -0.52, -5.2%). The benchmark index, however, staged a steady rebound throughout the day to extend its winning streak to eight straight sessions. The S&P 500 finished higher by 0.1%.

The Nasdaq Composite increased 0.2%, while the Dow Jones Industrial Average lost 0.3%. The decline in the Dow can predominately be attributed to Boeing, which announced it will temporarily cut production of its 737 Max aircraft by approximately 20%.

[…]

Oil prices ($64.39/bbl, +1.29, +2.0%) were also in focus after breaking out to fresh five-month highs on Monday. The move higher was supported by ongoing concerns stemming from the military conflict in OPEC producer Libya. The S&P 500 energy sector increased 0.5% and was a consistent leader throughout the day.

[…]

U.S. Treasuries finished slightly lower to begin the week, pushing yields higher across the curve. The 2-yr yield and the 10-yr yield increased two basis points each to 2.36% and 2.52%, respectively. The U.S. Dollar Index declined 0.4% to 97.04.

Reviewing Monday’s lone economic report, Factory Orders for February:
• Factory orders declined 0.5% in February (Briefing.com consensus -0.6%) on the heels of a downwardly revised 0.0% reading (from +0.1%) in January. This marked the fourth decline in the last five months for new orders for manufactured goods.
o The key takeaway from the report is that business investment was soft in February, evidenced by the 0.1% decline in orders for nondefense capital goods excluding aircraft. Shipments of those same goods, though, increased 0.4%, which will be a positive input for Q1 GDP forecasts.

  • 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) XLE (Cross-Over) 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 Above
Real Estate XLRE (Cross-Over) SPY (Cross-Under) Above
Telecom SPY (Cross-Under) SPY Above

 

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