Morning Notes – Tuesday April 30, 2019

Directional Bias For The Day:

  • S&P Futures are down; moving sideways to down since the close on Monday
  • The odds are for a sideways to down day – watch for break above 2945.50 for change of fortune
  • Key economic data due:
    • S&P/CS Composite-20 HPI (3.0% vs. 3.7% est. ; prev. 3.5%) at 9:00 AM
    • Chicago PMI (est. 59.1); prev. 58.7) at 9:45 AM
    • CB Consumer Confidence (est. 126.2; prev. 124.1) at 10:00 AM
    • Pending Home Sales (est. 1.1% prev. -1.0% ) at 10:00 AM

Markets Around The World

  • Markets in the East closed mostly down – Shanghai was up; Tokyo was closed for trading
  • European markets are mixed – Germany, U.K., France and STOX 600 are down; Spain, Italy and Switzerland are up
  • Currencies:
    Up Down
    • EUR/USD
    • GBP/USD
    • NZD/USD
    • Dollar index
    • USD/JPY
    • USD/CHF
    • AUD/USD
    • USD/CAD
    • USD/INR
  • Commodities:
    Up Down
      • Crude Oil
      • Gold
      • Silver
      • Copper
      • Sugar
      • Coffee
      • Cotton
      • Cocoa
    • NatGas
    • Platinum
    • Palladium
  • Bonds
    • 10-yrs yield is at 2.545%, up from April 29 close of 2.536%;
    • 30-years is at 2.968%, up from 2.965%
    • 2-years yield is at 2.306%, up from 2.294%
    • The 10-Year-&-2-Year spread is at 0.235, down from 0.242

Key Levels:

  • Critical support levels for S&P 500 are 2939.35, 2926.64 and 2923.68
  • Critical resistance levels for S&P 500 are 2949.52, 2954.14 and 2958.75
  • Key levels for eMini futures: break above 2945.50, the high of 8:00 AM and break below 2935.75, the low of 9:30 PM on Monday

Pre-Open

  • On Monday, at 4:00 PM, S&P future (June contract) closed at 2945.00 and the index closed at 2943.03 – a spread of about +2.00 points; futures closed at 2943.00 for the day; the fair value is +2.00
  • Pre-NYSE session open, futures are mixed – at 8:45 AM, S&P 500 futures were down by -3.75; Dow up by +36 and NASDAQ down by -28.75

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 small green candle with small upper shadow and almost no lower shadow
    • %K is at or above %D; declined from 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 2951.00 and 2920.00
    • RSI-9 is near 50 after coming down from above 70 on Monday
    • %K crossed above %D at 10:00 PM from below 20
  • At/above 20-bar EMA, which is above EMA10 of EMA50
  • Bias: Up
30-Minute (e-mini future)
  • Moving mostly sideways since 3:30 PM on April 26 between 2951.50 and 2935.75
    • A Head-&-Shoulder pattern is emerging with extended left and right shoulders break below 2935.75 will trigger the pattern
    • RSI-9 rising since 9:00 PM from below 40; just above 50
    • %K crisscrossing %D above 50
  • At/above 20-bar EMA, which is at/above EMA10 of EMA50
  • Bias: Up-Side
15-Minute (e-mini future)
  • Bollinger Band (20, 2.0) is moving sideways to down since 9:45 PM on Monday
  • The Bollinger Band narrowed from 10:15 PM to 5:15 AM; expanded slightly after that with price first walking up the upper band and then walking down the lower band
  • Stochastic (9, 1, 3): %K is below %D
  • Bias: Up-Side

Previous Session

Major U.S. indices closed mostly higher on Monday, April 29 in mostly lower volume. Dow Jones Transportation Average closed down and S&P 500 traded in higher volume. S&P 500 and NASDAQ Composite made all time highs. Wilshire 5000 Total Market Index and DJIA closed near its all time high.

From Briefing.com:

The S&P 500 (+0.1%) and Nasdaq Composite (+0.2%) both set new closing, and intraday, records on Monday. It was a tight-ranged session, but positive economic data and the outperformance of the financial and communication services stocks helped maintain the market’s bullish bias.

The Russell 2000 increased 0.4%, while the Dow Jones Industrial Average (+0.04%) finished fractionally higher.

The latest personal income and spending data helped advance the narrative that the U.S. economy seems to be benefiting still from solid consumer spending activity and muted inflation pressures.

Personal spending jumped 0.9% (Briefing.com consensus 0.8%) in March. The PCE Price Index, the Fed’s preferred inflation gauge, was up 1.5% yr/yr in March while the core PCE Price Index was up 1.6% yr/yr in March — both below the Fed’s annual inflation target of 2.0%.

[…]

At the same time, the outperformance of the S&P 500 financials (+0.9%) and communication services (+0.9%) sectors helped keep the broader market afloat.

[…]

On the other hand, the rate-sensitive real estate (-1.1%) and utilities (-0.6%) sectors showed some weakness amid the uptick in yields.
The 2-yr yield and the 10-yr yield increased three basis points each to 2.30% and 2.54%, respectively. The U.S. Dollar Index declined 0.2% to 97.87. WTI crude increased 0.4% to $63.44/bbl.

[…]

• Briefly, personal spending increased 0.1% in February while the PCE Price Index and core PCE Price Index, which excludes food and energy, both rose just 0.1%. For March, personal income increased 0.4%, as expected, while personal spending surged 0.9% (Briefing.com consensus +0.8%). The PCE Price Index increased 0.2% while the core PCE Price Index was flat (Briefing.com consensus +0.1%).
o The key takeaway from the report is that this data was imputed in the first quarter GDP report, so it shouldn’t be too surprising. Ultimately, it helps advance the narrative that the U.S. economy seems to be benefiting still from solid consumer spending activity and muted inflation pressures.

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