Directional Bias For The Day:
- S&P Futures are lower; sharp decline at 8:30 PM; bouncing since 5:30 AM after falling nearly 60 points; up 20 points since
- The odds are for a down day with elevated volatility – watch for break above 3240.00 for change of fortune
- Key economic data due:
- ISM Manufacturing PMI ( 49.0 est. ; prev. 48.1) at 10:00 AM
- Construction Spending ( 0.4% est. ; prev. -0.8% ) at 10:00 AM
- ISM Manufacturing Prices ( 47.7 est. ; prev. 46.7) at 10:00 AM
Directional Bias Before Open:
- Critical support levels for S&P 500 are 3231.72, 3212.03 and 3204.10
- Critical resistance levels for S&P 500 are 3235.53, 3244.13 and 3258.14
- Key levels for eMini futures: break above 3235.00, the high of 2:00 AM and break below 3206.75, the low of 5:30 AM
- On Thursday, at 4:00 PM, S&P future (March 2020) closed at 3258.50 and the index closed at 3257.85 – a spread of about +0.75 points; futures closed at 3259.00 for the day; the fair value is -0.50
- Pre-NYSE session open, futures are lower – at 8:45 AM, S&P 500 futures were down by -30.00; Dow by -236 and NASDAQ up by -95.50
Markets Around The World
- Markets in the East closed mostly lower – Sydney and Seoul were up; Tokyo was closed
- European markets are mostly lower – Switzerland is up
- Dollar index
- Crude Oil
- Cocoa (Unch.)
- 10-yrs yield closed at 1.823%, down from December 31 close of 1.919%;
- 30-years is at 2.283%, down from 2.389%
- 2-years yield is at 1.573%, down from 1.577%
- The 10-Year-&-2-Year spread is at 0.350 down from 0.342
- Is at 14.66 up from January 2 close of 12.47; above 5-day SMA
- Recent high was 15.39 on December 31; recent low was 11.72 on December 26
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 mostly higher on Thursday, January 2, the first day of 2020, in higher volume. Russell 2000 closed down. Major indices except Russell 2000 and Dow Jones Transportation Average closed at all times highs.
The large-cap indices climbed to new highs on this first trading day of 2020, as fresh stimulus out of China helped ignite a global equity rally. The Nasdaq Composite rose 1.3%, and the S&P 500 (+0.8%) and Dow Jones Industrial Average (+1.2%) followed suit. The Russell 2000 (-0.1%) finished lower.
China started the new year by announcing it will cut the reserve requirement ratio for small and large banks by 50 basis points on Jan. 6, providing about $115 billion in additional liquidity that can be lent out. China’s Shanghai Composite rose 1.2%, and Europe Stoxx 600 rose 0.9% amid a view that the stimulus action could have global ripple effects.
The advance in longer-dated U.S. Treasuries, which caused some curve-flattening activity, was another conflicting occurrence. The 2-yr yield was unchanged at 1.57%, and the 10-yr yield declined four basis points to 1.88%. The U.S. Dollar Index rose 0.4% to 96.81. WTI crude increased 0.1% (+0.05) to $61.15/bbl.
• Initial claims for the week ending December 28 decreased by 2,000 to 222,000 (Briefing.com consensus 225,000) while continuing claims for the week ending December 21 increased by 5,000 to 1.728 million.
o These headline results were not that intriguing, yet the key takeaway from the report — and what is intriguing — is that the four-week moving average for initial claims, which are a leading indicator, increased by 4,750 to 233,250. That is the highest four-week moving average since January 27, 2018.