Directional Bias For The Day:
- S&P Futures are lower; fresh leg down since 6:30 AM; break below a horizontal channel; 100% extension target almost achieved
- The odds are for a down day with elevated volatility – watch for break above 2861.75 for change of fortune
- China trade and tariff news is still impacting the sentiments
- Key economic data due:
- CPI (0.3% vs. 0.4% est.; prev. 0.4%) 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 mostly up – Tokyo and Mumbai were down
- European markets are higher
- Dollar index
- Crude Oil
- 10-yrs yield closed at 2.442%, down from May 8 close of 2.482%;
- 30-years is at 2.872%, down from 2.889%
- 2-years yield is at 2.246%, down from 2.307%
- The 10-Year-&-2-Year spread is at 0.184, up from 0.175
- Critical support levels for S&P 500 are 2859.16, 2836.40 and 2828,08
- Critical resistance levels for S&P 500 are 2875.87, 2878.94 and
- Key levels for eMini futures: break above 2861.75, the high of 7:30 AM and break below 2849.00, the low of 8:30 AM
- On Thursday, at 4:00 PM, S&P future (June contract) closed at 2871.00 and the index closed at 2870.72 – a spread of about +1.25 points; futures closed at 2872.75 for the day; the fair value is -1.75
- Pre-NYSE session open, futures are lower – at 8:30 AM, S&P 500 futures were down by -18.25; Dow by -126 and NASDAQ by -54.25
Directional Bias Before Open
- Weekly: Uptrend
- Daily: Uptrend under pressure
- 120-Min: Down
- 30-Min: Down
- 15-Min: Down
- 6-Min: Down
The trend and patterns on various time frames for S&P 500:
|2-Hour (e-mini future)||
|30-Minute (e-mini future)||
|15-Minute (e-mini future)||
Major U.S. indices closed lower on Thursday, May 9 in higher volume. Indices gapped down at the open and then declined sharply till midday. They reversed course around noon and then recouped most of the losses. Many indices made hammer like pattern with long lower shadow and short upper shadow and real body. A close above Thursday high will be positive for the market.
The S&P 500 declined 0.3% on Thursday, although it had dropped as much as 1.5% on concerns about an elongated trade war with China. The Dow Jones Industrial Average (-0.5%), the Nasdaq Composite (-0.4%), and the Russell 2000 (-0.3%) also finished near their highs after being down as much as 1.7%, 1.9%, and 1.8%, respectively.
Investors were steadfast on de-risking, pushing stocks to session lows in morning action. All 11 S&P 500 sectors showed considerable losses, which helped send the S&P 500 below its 50-day moving average (2860). U.S. Treasuries rose in a flight-to-safety trade, and the CBOE Volatility Index (VIX 19.35, -0.26) touched 23.38 at its high.
Nevertheless, the trade-sensitive S&P 500 materials (-0.8%) and information technology (-0.7%) sectors were the worst-performing groups. The real estate (+0.3%) and energy (+0.1%) sectors were the lone sectors to finish higher.
U.S. Treasuries finished on a higher note, although buying interest cooled off as equities staged a recovery. The 2-yr yield declined four basis points to 2.26%, and the 10-yr yield declined three basis points to 2.46%. The U.S. Dollar Index lost 0.2% to 97.42. WTI crude lost 0.6% to $61.73/bbl.
• The Producer Price Index for final demand increased 0.2% m/m in April, as expected, while the index for final demand, less food and energy (“core PPI”), increased 0.1% (Briefing.com consensus 0.2%). That left the yr/yr increases at 2.2% and 2.4%, respectively, unchanged from March.
o The key takeaway from the report is that it didn’t show any acceleration in core producer inflation, which will keep the market’s pass-through concerns for the consumer in check.
• Initial claims for the week ending May 4 decreased by 2,000 to 228,000 (Briefing.com consensus 220,000). Continuing claims for the week ending April 27 increased by 13,000 to 1.684 million.
o The key takeaway from the report is that the four-week moving average of 220,250 remains relatively close to a 50-year low, which implies there hasn’t been any undue weakening in the labor market.
• The trade deficit was $50.0 billion in March (Briefing.com consensus -$51.2 bln), up from -$49.3 billion in February. Exports of $212.0 billion were $2.1 billion more than February exports. Imports of $262.0 billion were $2.8 billion more than February imports.
o The key takeaway from the report is that there hasn’t been a meaningful improvement in the trade deficit despite efforts to reduce it with increased tariffs.
• Wholesale inventories declined 0.1% in March (Briefing.com consensus +0.1%) on top of an upwardly revised 0.4% increase (from 0.2%) in February. Wholesale sales jumped 2.3% following an unrevised 0.3% increase in February.
o The key takeaway from the report is that inventory growth continues to outpace sales growth on a year-over-year basis, which should help keep price pressures in check.