Directional Bias For The Day:
- S&P Futures are higher;
- The odds are for an up day with elevated volatility
- Key economic data due:
- Final Manufacturing PMI (51.9 vs. 51.7 est.; prev. 51.7) at 9:45 AM
- ISM Manufacturing PMI ( 50.9 vs. 48.5 est.; prev. 472. ) at 10:00 AM
- Construction Spending ( -0.2% vs. 0.35% est.; prev. 0.7%) at 10:00 AM
- ISM Manufacturing PMI (53.3 vs. 52.0 est.; prev. 51.7) at 10:00 AM
Directional Bias Before Open:
- Critical support levels for S&P 500 are 3242.80, 3238.46 and 3214.68
- Critical resistance levels for S&P 500 are 3265.72, 3282.33 and 3293.47
- Key levels for eMini futures: break above 3250.50, the high of 9:00 PM and break below 3232.75, the low of 5:00 AM
- On Friday, at 4:00 PM, S&P future (March 2020) closed at 3222.50 and the index closed at 3225.52 – a spread of about -1.00 points; futures closed at 3224.00 for the day; the fair value is -1.50
- Pre-NYSE session open, futures are higher – at 9:00 AM, S&P 500 futures were up by +18.00; Dow by +131 and NASDAQ by +59.75
Markets Around The World
- Markets in the East were closed mostly lower – Hong Kong was up;
- European markets are higher
- Dollar index
- Crude Oil
- 10-yrs yield is at 1.551%, up from January 31 close of 1.558%;
- 30-years is at 2.030%, up from 2.015%
- 2-years yield is at 1.375%, down from 1.323%
- The 10-Year-&-2-Year spread is at 0.176 down from 0.197
- Is at 17.43 down -1.41 from January 31; above 5-day SMA
- Next high resistance is 21.46, the high of October 2, 2019; the low support is the 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 sharply lower on Friday, January 31 in higher volume. Most indices made a bearish engulfing candle and broke below a support level created only few days ago like an ABCD down pattern.
For the week, major indices closed lower in higher volume. All S&P sectors except Utilities closed lower. Asian and European markets also closed down for the week.
The stock market sold off to end the week, and month, on growing concerns about the coronavirus and the negative effect it could have on economic growth. The Dow Jones Industrial Average (-2.1%) and Russell 2000 (-2.1%) led the retreat, followed by the S&P 500 (-1.8%) and Nasdaq Composite (-1.6%).
Ten of the 11 S&P 500 sectors finished lower, including six that lost at least 2.0%. The energy sector (-3.2%) bore the brunt of the damage amid the continued weakness in oil prices ($51.58/bbl, -0.60, -1.2%) and the earnings disappointments in Exxon Mobil (XOM 62.12, -2.67, -4.1%) and Chevron (CVX 107.14, -4.26, -3.8%).
Unsurprisingly, U.S. Treasuries remained on the advance amid the perceived growth concerns that rattled equities. The 2-yr yield fell seven basis points to 1.32%, and the 10-yr yield fell four basis points to 1.52%. The U.S. Dollar Index fell 0.5% to 97.38.
• Personal income was up 0.2% m/m in December (Briefing.com consensus +0.3%) while personal spending was up 0.3%, as expected. The PCE Price Index was up 0.3% (Briefing.com consensus +0.2%). That left the yr/yr change at 1.6% versus 1.4% in November. The core PCE Price Index was up 0.2%, as expected. That left the yr/yr change at 1.6% versus 1.5% in November.
o he key takeaway from the report is that inflation is still running comfortably below the Fed’s longer-run inflation target of 2.0%, making it clear that the market need not fear a rate hike anytime soon.
• The Q4 Employment Cost Index increased 0.7%, as expected, seasonally adjusted, for the three-month period ending in December 2019 after increasing 0.7% for the three-month period ending in September 2019.
o The key takeaway from the report is that it shows a continuation of moderate growth in compensation costs.
• The final reading for the January University of Michigan Index of Consumer Sentiment showed an upward revision to 99.8 (Briefing.com consensus 99.1) from the preliminary reading of 99.1. The final reading for December was 99.3.
o The key takeaway from the report is that consumer attitudes remained resilient despite a spate of disconcerting items, such as the geopolitical conflict with Iran, the impeachment trial, and the onset of the coronavirus, underscoring that attitudes about employment and income potential are integral to consumer sentiment.
• The Chicago PMI for January fell to 42.9 (Briefing.com consensus 48.7) from a downwardly revised 48.2 reading in January (from 48.9). This was its lowest level since December 2015.