Morning Notes – Monday April 29, 2019

Directional Bias For The Day:

  • S&P Futures are little changed; moving sideways since the close on Friday
  • The odds are for an up day – watch for break below 2937.75 for change of fortune
  • Key economic data due:
    • February Core PCE Price Index ( 0.1% vs. 0.2% est. ; prev. 01.%) at 8:30 AM
    • February Personal Spending (0.1% vs. 0.2% est. ; prev. 0.1% ) at 8:30 AM
    • March Core PCE Price Index (0.0% vs. 0.1%est.) at 8:30 AM
    • March Personal Spending (0.9% vs. 0.7% est.) at 8:30 AM
    • Personal Income (0.1% vs. 0.4% est.; 0.2% prev. ) at 8:30 AM

Markets Around The World

  • Markets in the East closed mostly up – Shanghai and Sydney closed down; Tokyo and Mumbai were closed for trading
  • European markets are mostly lower – U.K and Switzerland are up
  • Currencies:
    Up Down
    • Dollar index
    • EUR/USD
    • USD/JPY
    • USD/CHF
    • AUD/USD
    • NZD/USD
    • USD/CAD
    • USD/INR
    • GBP/USD
  • Commodities:
    Up Down
      • Cotton
      • Cocoa
    • Crude Oil
    • NatGas
    • Gold
    • Silver
    • Copper
    • Platinum
    • Palladium
    • Sugar
    • Coffee
  • Bonds
    • 10-yrs yield closed at 2.52%, down from April 25 close of 2.534%;
    • 30-years is at 2.948%, up from 2.947%
    • 2-years yield is at 2.330%, down from 2.342%
    • The 10-Year-&-2-Year spread is at 0.199, up from 0.192

Key Levels:

  • Critical support levels for S&P 500 are 2926.64, 2923.68 and 2917.56
  • Critical resistance levels for S&P 500 are 2940.91, 2947.32 and 2954.76
  • Key levels for eMini futures: break above 2946.75, the high of 4:00 AM and break below 2937.75, the low of 7:00 AM

Pre-Open

  • On Friday, at 4:00 PM, S&P future (June contract) closed at 2941.75 and the index closed at 2939.88 – a spread of about +1.75 points; futures closed at 2941.50 for the day; the fair value is +0.25
  • Pre-NYSE session open, futures are little changed – at 8:45 AM, S&P 500 futures were down by -0.50; Dow unchanged and NASDAQ down by -2.25

Directional Bias Before Open

  • Weekly: Uptrend
  • Daily: Uptrend
  • 120-Min: Up
  • 30-Min: Up-Side
  • 15-Min: Up-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 26 was a green candle with almost no upper shadow and small lower shadow; the index made all time closing high
    •  Stochastics (9,1, 3) and RSI (14) are moving up – %K is above %D and near 100;
    • RSI is rising and above 70
    • The index has broken above the 78.6% Fibonacci retracement of the decline from the high in early October 2018
  • Last week was up +34.85 or +0.5% and ATR is 43.53
  • Last week’s pivot point=2925.37, R1=2954.39, R2=2968.90; S1=2910.86, S2=2881.84; R1/R2 pivot levels were breached
  • An up week; fourth 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 green candle with small lower shadow and almost no upper shadow
    • %K is above %D and near 100;
    • Stochastic (70, 1, 3) Pop since February 11
    • RSI-9 is above 75; 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 higher following a break above a horizonal trading range on April 23; forming another trading range between 2945.00 and 2920.00
    • RSI-9 is declining since 2:00 AM; below 60 and forming Bearish Divergence
    • %K crossed below %D at 2:00 AM; near 20
  • Above 20-bar EMA, which is above EMA10 of EMA50
  • Bias: Up
30-Minute (e-mini future)
  • Moving sideways since 3:30 PM on April 26 between 2946.75 and 2937.75
    • RSI-9 falling since 4:00 AM after making a Bearish Divergence
    • %K crisscrossed %D down from above 90 at 6:00 PM on Sunday to below 20; crossed above %D at 7:00 AM and is near 50
  • At/below 20-bar EMA, which is above EMA10 of EMA50
  • Bias: Up-Side
15-Minute (e-mini future)
  • Bollinger Band (20, 2.0) is moving sideways to down since 9:15 PM on Sunday
  • The Bollinger Band was narrow from 9:15 PM to 4:30 AM; expanding since then with price mostly walking down the lower band
  • Stochastic (9, 1, 3): %K is crisscrossing %D higher from below 20 at 6:30 AM; near 50
  • Bias: Up-Side

Previous Session

Major U.S. indices closed higher on Friday, April 26 in mostly lower volume. Dow Jones Industrial Average traded in higher volume. DJIA, S&P 500, NASDAQ COMPOSITE and Wilshire 5000 Total Market Index are near their al time highs. Dow Jones Transportation Average, Russell 2000 and NYSE Composite are not as close to their all time highs.

For the week, most indices closed up. DJIA and DJT were down for the week. The volume was higher than the previous week. DJIA made a near doji and DJT made a spinning top candle. Other made large green candle with small or almost no upper shadows and small lower shadows.

From Briefing.com:

The S&P 500 (+0.5%) and Nasdaq Composite (+0.3%) set new closing highs on Friday, as shares of Amazon (AMZN 1950.63, +48.38, +2.5%) and strong Q1 GDP data helped the market steer past early weakness.

The underperformance in the energy and semiconductor stocks, however, put a lid on further gains.

The Dow Jones Industrial Average increased 0.3%, and the Russell 2000 outperformed with a gain of 1.0%.

[…]

The big moves in Amazon and Ford (F 10.41, +1.01, +10.7%), which also provided solid results, boosted the S&P 500 consumer discretionary sector (+0.9%). The health care (+1.0%), financials (+0.9%), and consumer staples (+0.9%) sectors also outperformed.

[…]

Signs that the U.S. economy is exhibiting solid growth and muted inflation pressures was another positive consideration for equities and U.S. Treasuries alike. The advance estimate for first quarter GDP increased 3.2% (Briefing.com consensus 1.9%), while the GDP Price Deflator was up just 0.9% (Briefing.com consensus 1.4%) after increasing 1.7% in the fourth quarter.

The 2-yr yield declined four basis points to 2.27%, and the 10-yr yield declined three basis points to 2.51%. The U.S. Dollar Index declined 0.2% to 98.04.

[…]

• Real GDP increased at an annual rate of 3.2% (Briefing.com consensus 1.9%), according to the advance estimate for first quarter GDP. The GDP Price Deflator was up just 0.9% (Briefing.com consensus 1.4%) after increasing 1.7% in the fourth quarter.
o The key takeaway from the report is that it reinforced the market’s Goldilocks view of the U.S. economy, which is exhibiting solid growth and muted inflation pressures.
• The final reading for the University of Michigan Index of Consumer Sentiment for April edged up to 97.2 (Briefing.com consensus 96.7) from the preliminary reading of 96.9. That was down from the final reading of 98.4 for March, but right in-line with the average for the past 28 months.
o The key takeaway from the report is that 44% of consumers said they were feeling better about their financial prospects for the year ahead. That is the highest level for that reading since 2004 and another indication that should quiet recession talk.

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