Morning Notes – Wednesday April 10, 2019

Directional Bias For The Day:

  • S&P Futures are higher; moving up since 9:30 PM on Tuesday; back within a trading range between 2899.50 and 2884.25 for past two days;
  • The odds are for a sideways to down day – watch for break above 2891.25 and break below 2883.75 for clarity
  • Key economic data due:
    • CPI ( 0.4% vs. 0.3% est.; prev. 0.2%) at 8:30 AM
    • Core CPI (0.1% vs. 0.2% est.; prev. 0.1%) at 8:30 AM

Markets Around The World

  • Markets in the East closed mixed – Shanghai, Sydney, Seoul and Singapore closed up; Hong Kong. Tokyo and Mumbai closed down
  • European markets are mostly higher – U.K. and Switzerland are down
  • Currencies:
    Up Down
    • Dollar index
    • GBP/USD
    • USD/JPY
    • USD/CHF
    • AUD/USD
    • NZD/USD
    • USD/CAD
    • USD/INR
    • EUR/USD
  • Commodities:
    Up Down
    • Crude Oil
    • NatGas
    • Gold
    • Silver
    • Copper
    • Platinum
    • Palladium
    • Sugar
    • Coffee
    • Cotton
    • Cocoa
  • Bonds
    • 10-yrs yield closed at 2.494%, down from April 8 close of 2.519%;
    • 30-years is at 2.909%, down from 2.925%
    • 2-years yield is at 2.355%, down from 2.364%
    • The 10-Year-&-2-Year spread is at 0.139, down from 0.155

Key Levels:

  • Critical support levels for S&P 500 are 2873.33, 2867.14 and 2858.75
  • Critical resistance levels for S&P 500 are 2886.88, 2891.15 and 2895.95
  • Key levels for eMini futures: break above 2891.25, the high of 6:30 AM and break below 2883.75, the low of 8:30 AM

Pre-Open

  • On Tuesday, at 4:00 PM, S&P future (June contract) closed at 2883.75 and the index closed at 2878.20 – a spread of about +5.50 points; futures closed at 2882.50 for the day; the fair value is +1.25
  • Pre-NYSE session open, futures are higher – at 8:30 AM, S&P 500 futures were up by +4.25; Dow by +43 and NASDAQ by +14.00

Directional Bias Before Open

  • Weekly: Uptrend
  • Daily: Uptrend
  • 120-Min: Side
  • 30-Min: Side
  • 15-Min: Side-Up
  • 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 red candle that is completing the 3-day the evening star pattern, a close below Tuesday will complete the pattern; almost no upper shadow and small lower shadow
    •  %K crossed below %D from near 100;
    • Stochastic (70, 1, 3) Pop since February 11
    • RSI-9 turned down from 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 down since 10:00 AM on April 5;
    • 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 again crossing below %D just below 80; Bearish Divergence on Monday
  • At/above 20-bar EMA, which is above EMA10 of EMA50
  • Bias: Side
30-Minute (e-mini future)
  • Moving up since 9:30 PM on April 9
  • RSI-9 rising since 3:00 PM on Monday after forming a Bullish Divergence
  • %K is crossing above %D from below 40;
  • 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 up since 8:00 PM
  • The Bollinger Band narrowed from 8:00 PM to 00:00 AM and then again from 6:30 AM to 7:15 AM; expanding ever so slightly
  • Stochastic (9, 1, 3): %K crossed above %D at 8:15 AM from near 30
  • Bias: Side-Up

Previous Session

Major U.S. indices closed mostly lower on Tuesday, April 9 in higher volume. The day’s tone was decisive down. Dow Jones Industrial Average is leading the market down. It is at the upper bound of the gap-up of April 1. On 2-hour chart both the futures and cash index of DJIA are forming a head-&-shoulder pattern. A break below 26071.69 would be bearish for DJIA, which could weigh negatively on S&P 500 too.

From Briefing.com:

The S&P 500 lost 0.6% on Tuesday, as negative macroeconomic headlines and a bit of corporate news fostered some broad-based profit taking. Tuesday’s decline snapped an eight-session winning streak for the benchmark index.

The Dow Jones Industrial Average lost 0.7%, the Nasdaq Composite lost 0.6%, and the Russell 2000 lost 1.2%.

[…]

The S&P 500 industrials (-1.4%) and financial (-0.9%) sectors were added weights for the market following some corporate developments.

[…]

U.S. Treasuries saw increased buying interest following the IMF growth cut for 2019. The 2-yr yield and the 10-yr yield decreased two basis points each to 2.34% and 2.50%, respectively. The U.S. Dollar Index finished flat at 97.01. WTI crude lost 0.5% to $64.06/bbl.

[…]

• The NFIB Small Business Optimism Index for March ticked higher to 101.8 from the prior month’s reading of 101.7.
• The February Job Openings and Labor Turnover Survey showed that job openings decreased to 7.087 million from a revised 7.625 million (from 7.581 million) in January.

  • 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 Below
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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