Directional Bias For The Day:
- S&P Futures are sharply lower; resuming the downtrend since 7:30 AM; near the lows of October 2019
- The odds are for a down day with elevated volatility; watch for break above 2960.00 for change of fortune
- Key economic data due:
- Core PCE Price Index ( 0.1% vs. 0.2% est.; prev. 0.2%) at 8:30 AM
- Personal Spending ( 0.2% vs. 0.3% est.; prev. 0.4%) at 8:30 AM
- Personal Income ( 0.6% vs. 0.3% est.; prev. 0.1% ) at 8:30 AM
- Prelim Wholesale Inventories (-0.2% vs. 0,1% est.; prev. -0.2%) at 8:30 AM
- Chicago PMI ( 49.0 vs. 46.1 est.; prev. 42.9) at 9:45 AM
- Revised UoM Consumer Sentiment ( 101.0 vs. 100.7 est.; prev. 100.9) at 10:00 AM
- Revised UoM Inflation Expectations ( 2.4%; prev. 2.5% ) at 10:00 AM
Directional Bias Before Open:
- Critical support levels for S&P 500 are 3070.33, 3060.53 and 3050.72
- Critical resistance levels for S&P 500 are 3078.80, 3087.41 and 3094.97
- Key levels for eMini futures: break above 2953.75, the high of 7:30 AM and break below 2879.00, the low of 4:30 AM
- On Thursday, at 4:00 PM, S&P future (March 2020) closed at 2973.75 and the index closed at 2978.76 – a spread of about -5.00 points; futures closed at 2957.00 for the day; the fair value is +16.75
- Pre-NYSE session open, futures are lower – at 9:15 AM, S&P 500 futures were down by -78.25; Dow by -571 and NASDAQ by -227.50
Markets Around The World
- Markets in the East closed sharply lower
- European markets are sharply lower
- Dollar index
- Dollar index
- Crude Oil
- 10-yrs yield is at 1.193%, down from February 27 close of 1.299%;
- 30-years is at 1.698%, down from 1.784%
- 2-years yield is at 0.911% down from 1.153%
- The 10-Year-&-2-Year spread is at 0.282 up from 0.146
- Is at 41.62 up +2.46 from February 25 close; above 5-day SMA;
- At highest level since February 2018; Next high resistance is 50.30, the high of February 6, 2018; the low support is the upper high of the gap at 22.00, the low on February 24
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)||
The stock market extended its recent sell-off by more than 4% on Thursday in a volatile session, as the widening spread of the coronavirus heightened pessimism among investors. The S&P 500 dropped as much as 3.5% shortly after the open, then cut its losses to 0.6% by midday, but ultimately closed at session lows with a 4.4% decline.
The Dow Jones Industrial Average (-4.4%), Nasdaq Composite (-4.6%), and Russell 2000 (-3.5%) experienced similar price action. Each of the major indices fell into correction territory, which is often defined as a decline of at least 10% from a recent high, and today’s drop sent the S&P 500 well below its 200-day moving average (3046.58) amid heavy selling into the close.
From a sector perspective, all 11 S&P 500 sectors fell between 3.3% (health care) and 5.6% (real estate). Other notable moves included WTI crude falling 3.0% to $47.24/bbl to extend its weekly decline to 12.1% and the CBOE Volatility Index surging 42.1% to 39.16 in a protection trade against further equity weakness.
At session’s end, the 2-yr yield declined five basis points to 1.10%, and the 10-yr yield declined one basis point to 1.30%. The U.S. Dollar Index fell 0.5% to 98.48.
• January durable goods orders declined 0.2% (Briefing.com consensus -1.6%). Excluding transportation, durable goods orders were up 0.9% (Briefing.com consensus +0.2%).
o The key takeaway from the report is that it showed a nice pickup in business spending in January, evidenced by the 1.1% increase in nondefense capital goods orders excluding aircraft. Still, concerns about a slowdown in spending will persist since the spread of the coronavirus, and responses to control its spread, has intensified in February.
• Initial claims for the week ending February 22 increased by 8,000 to 219,000 (Briefing.com consensus 212,000). Continuing claims for the week ending February 15 decreased by 9,000 to 1.724 million.
o The key takeaway from the report is that the four-week moving average of 209,750 for initial claims remains at an encouragingly low level in terms of the labor market outlook.
• The second estimate for Q4 GDP was unchanged at 2.1% (Briefing.com consensus 2.2%) while the GDP Price Deflator (Briefing.com consensus 1.4%) was revised down to 1.3% from 1.4%.
o The key takeaway from the report is that it is backward-looking and can be easily dismissed in light of the more current growth problems related to the coronavirus.
• Pending Home Sales rose 5.2% in January (Briefing.com consensus +2.0%). Today’s reading follows a revised 4.3 decline in December (from -4.9%).