Morning Notes – Friday April 12, 2019

Directional Bias For The Day:

  • S&P Futures are higher; moving up since 3:00 AM; broke above past few day’s trading range; first target near 2909.00 is achieved; next target is target near 2915.00
  • The odds are for an up day – watch for break below 2902.00 for change of fortune
  • Key economic data due:
    • Import Prices ( 0.6% vs. 0.4% est.; prev. 1.0%) at 8:30 AM
    • Prelim UoM Consumer Sentiment ( est. 98.1; prev. 984) at 10:00 AM;

Markets Around The World

  • Markets in the East closed mostly up – Shanghai was down
  • European markets are mostly higher – Switzerland is down
  • Currencies:
    Up Down
    • EUR/USD
    • GBP/USD
    • USD/JPY
    • AUD/USD
    • NZD/USD
    • USD/INR
    • Dollar index
    • USD/CHF
    • USD/CAD
  • Commodities:
    Up Down
      • Crude Oil
      • NatGas
      • Gold
      • Silver
      • Copper
      • Platinum
      • Palladium
    • Sugar
    • Coffee
    • Cotton
    • Cocoa
  • Bonds
    • 10-yrs yield closed at 2.551%, up from April 10 close of 2.519%;
    • 30-years is at 2.965%, up from 2.904%
    • 2-years yield is at 2.352%, up from 2.315%
    • The 10-Year-&-2-Year spread is at 0.199, up from 0.162

Key Levels:

  • Critical support levels for S&P 500 are 2881.99, 2873.33 and 2867.14
  • Critical resistance levels for S&P 500 are 2909.64, 2919.78 and 2935.16
  • Key levels for eMini futures: break above 2911.75, the high of 8:00 AM and break below 2902.00, the low of 5:30 AM

Pre-Open

  • On Thursday, at 4:00 PM, S&P future (June contract) closed at 2892.25 and the index closed at 2888.32 – a spread of about +4.00 points; futures closed at 2891.75 for the day; the fair value is +0.50
  • Pre-NYSE session open, futures are higher – at 8:30 AM, S&P 500 futures were up by +18.25; Dow by +234 and NASDAQ by +37.00

Directional Bias Before Open

  • Weekly: Uptrend
  • Daily: Uptrend
  • 120-Min: Side-Up
  • 30-Min: Side-Up
  • 15-Min: Side-Up
  • 6-Min: Side-Up

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 red candle that is almost like doji with small lower shadow and smaller upper shadow
    • %K is trying to cross above %D near 85;
    • Stochastic (70, 1, 3) Pop since February 11
    • RSI-9 is turning up near 65; 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)
  • Break above a horizonal trading range after moving up since 8:00 PM on April 9 from its lower bound
    • 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 moving up after since 12:00 PM on April 11; near 75; risk of forming a Bullish Divergence
  • %K is above %D since 2:00 PM on Thursday from, near 20
  • Above 20-bar EMA, which is above EMA10 of EMA50
  • Bias: Side-Up
30-Minute (e-mini future)
  • Broke above a horizontal channel at European session start
    • 61.8% extension target near 2909.00 is achieved; the 100% extension target is near 2915.00
  • RSI-9 rising since 2:00 PM on Thursday; above 70
  • %K is crisscrossing %D above 80;
  • Above 20-bar EMA, which is above EMA10 of EMA50
  • Bias: Side-Up
15-Minute (e-mini future)
  • Bollinger Band (20, 2.0) is moving up since 3:45 AM
  • The Bollinger Band was narrow from 10:30 PM to 3:30 AM; expanding since with price mostly walking up the upper band
  • Stochastic (9, 1, 3): %K is crisscrossing %D above 80
  • Bias: Side-Up

Previous Session

Major U.S. indices closed mixed on Thursday, April 11 in mixed  volume. S&P 500, Dow Jones Transportation Average and Wilshire 5000 Total Market Index closed up. Dow Jones Industrial Average, NASDAQ Composite, Russell 2000 and NYSE closed down. DJIA and S&P 500 traded in higher volume. The day’s price range was small and range bound.

From Briefing.com:

The stock market finished little changed on Thursday in a tight-ranged trading session. The S&P 500 (unch) finished fractionally higher, as relative strength from financial and industrial stocks helped mitigate losses from shares of health care companies in front of earnings season.

The Dow Jones Industrial Average lost 0.1%, the Nasdaq Composite lost 0.2%, and the Russell 2000 lost 0.2%.

[…]

U.S. Treasuries finished on a lower note, pushing yields higher across the curve. The 2-yr yield increased four basis points to 2.35%, and the 10-yr yield increased three basis points to 2.50%. The U.S. Dollar Index increased 0.2% to 97.16. WTI crude fell 1.4% to $63.65/bbl.

[…]

• The Producer Price Index for final demand increased 0.6% in March (Briefing.com consensus +0.3%), bolstered predominately by a pickup in energy prices. The index for final demand, excluding food and energy, was up 0.3% (Briefing.com consensus +0.2%).
o The key takeaway from the report is that producer prices were up noticeably in March, yet there won’t be any alarming read through at this juncture for market participants who are cognizant that the Consumer Price Index for March showed a moderation in the year-over-year increase for core CPI.
• Initial claims for the week ending April 6 decreased by 8,000 to 196,000 (Briefing.com consensus 215,000). Continuing claims for the week ending March 30 fell by 13,000 to 1.713 million.
o The key takeaway from this leading-indicator report is that it clearly shows employers are reluctant to let go of employees, either because they can’t find other qualified workers or because they see demand being strong enough to justify the size of their existing work force.

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

 

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