Morning Notes – Tuesday March 3, 2020

Directional Bias For The Day:

  • S&P Futures are higher very volatile; daily bias is down;
  • The odds are for an up day with elevated volatility; watch for break below 3066.00 for change of fortune
  • No key economic data due:

Directional Bias Before Open:

  • Weekly: Uptrend Under Pressure
  • Daily: Uptrend Under Pressure
  • 120-Min: Down-Up
  • 30-Min: Down-Up
  • 15-Min: Side-Up
  • 6-Min: Side

Key Levels:

  • Critical support levels for S&P 500 are 3052.07, 3033.44 and 2992.00
  • Critical resistance levels for S&P 500 are 3096.79, 3135.50 and 3182.51
  • Key levels for eMini futures: break above 3096.75, the high of 7:30 AM and break below 3066.00, the low of 8:00 AM


  • On Monday, at 4:00 PM, S&P future (March 2020) closed at 3089.50 and the index closed at 3090.23 – a spread of about -0.75 points; futures closed at 3065.00 for the day; the fair value is +24.50
  • Pre-NYSE session open, futures are higher – at 9:15 AM, S&P 500 futures were up by +21.00; Dow by +224 and NASDAQ by +87.25

Markets Around The World

  • Markets in the East closed mostly higher – Hong Kong and Tokyo were down
  • European markets are higher
  • Currencies:
    Up Down
    • Dollar index
    • GBP/USD
    • AUD/USD
    • NZD/USD
    • USD/CAD
    • INR/USD
    • EUR/USD
    • USD/JPY
    • USD/CHF
  • Commodities:
    Up Down
    • Crude Oil
    • NatGas
    • Gold
    • Silver
    • Platinum
    • Sugar
    • Coffee
    • Cotton
    • Copper
    • Palladium
    • Cocoa
  • Bonds
    • 10-yrs yield closed at 1.088%, down from February 28 close of 1.127%;
    • 30-years is at 1.646%, down from 1.671%
    • 2-years yield is at 0.911% down from 0.926%
    • The 10-Year-&-2-Year spread is at 0.177 down from 0.201
  • VIX
    • Is at 33.32 down from March 2 close; below 5-day SMA;
    • At highest levels since February 2018; Next high resistance is 49.48, the high of February 28; 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:

  • Uptrend under pressure
  • February 2020 was a large red spinning top candle; declined 8.4%;
    • Stochastic %K is below %D and near 30; %K Bearish Divergence
    • RSI-9 declined from above 75 to 50; Bearish Divergence
    • Declined from the upper band of the 120-month regression channel to middle of the band
  • Sequence of higher highs and higher lows since February 2016 was broken in December 2018 but has resumed since then; last higher low was 2222.12 made in August 2019
  • The week ending on February 28 was a very large red candle with almost no upper shadow and a lower shadow that was one third of the real body
    • Stochastic (9,1, 3): %K is below %D after potential Bearish Divergence; below 20
    • RSI (9) is nearing 30 after Bearish Divergence
  • Last week was down -383.53 or -11.5%; the 5-week ATR is 163.51
  • Last week’s pivot point=3023.29, R1=3190.74, R2=3427.26; S1=2786.77, S2=2619.32; S1/S2/S3 pivot levels were breached
  • Second consecutive down week; third in last five weeks and fifth in last ten weeks
  • All time high of 3393.52 was during the week of February 17; Last swing low, 2822.12, was the low on August 5, 2019; previous last swing high was 3027.98, made during the week of July 22, 2019
  • Below 10-week EMA and 39-week SMA; above 89-week SMA but it was breached by the week’s low
  • Uptrend under pressure
  • A large green hammer candle with small lower shadow and very small upper shadow; three-day morning star pattern; rising above 200-day SMA
    • %K crossed above %D from near 0 on Friday; above 40
    • RSI-9 is rose from near 10 to near 35; above 8-day SMA;
  • Below 20-day EMA, 50-day EMA, 100-day SMA; above 200-day SMA;
  • Uptrend under pressure
2-Hour (e-mini future)
  • Downtrend; moving up since 10:00 AM on February 28 in steps and with elevated volatility from near a support level around 2850.00, the low of October 2019
    • RSI-21 is moving up from below 20 on Friday to above 65
    • %K is crisscrossing %D higher
  • Above EMA10 of EMA50, which is above 20-bar EMA
  • Bias: Down-Up
30-Minute (e-mini future)
  • Downtrend; Moving up since 10:00 AM on February 28
    • RSI-21 is rising since midnight on Friday from near 20 to above 50
    • %K is above %D
  • At/above 20-bar EMA, which is below EMA10 of EMA50
  • Bias: Side-Up
15-Minute (e-mini future)
  • Bollinger Band (20, 2.0) is moving up since 9:30 AM on Monday;
  • The Bollinger Band narrowed – relatively – from 9:45 PM to 3:15 AM; expanding since with large swings
  • Stochastic (9, 1, 3): %K is crisscrossing %D around 60
  • Bias: Side

Previous Session

Major U.S. indices closed higher on Monday, March 2 in volume lower than that on Friday. Indices gapped up at the open and though they bridged the gap, they closed much higher. They formed three-day morning star pattern. All S&P sectors closed up for the day.


The major averages surged on Monday with the S&P 500 (+4.6%) recording its first gain since February 19 while the Dow Jones Industrial Average (+5.1%) outperformed.


All eleven sectors finished the day in positive territory with nine groups climbing at least 3.0%. Countercyclical sectors like utilities (+5.9%), consumer staples (+5.5%), and real estate (+5.1%) outperformed throughout the day while the top-weighted technology sector (+5.7%) also made a significant contribution to the Monday advance.


Reviewing today’s economic data:
• The ISM Manufacturing Index for February managed to eke out an expansion reading at 50.1 ( consensus 50.5), but that was weaker than expected and down from 50.9 in January. The dividing line between growth and contraction is 50.0.
o The key takeaway from the report is that there were noted concerns in respondents’ commentary about the negative impact of the coronavirus, which is telling because the virus has continued to spread globally since the report was compiled, implying there is an increased risk of the index falling below 50.0 in March.
• Total construction spending increased 1.8% m/m in January ( consensus +0.7%) on the heels of an upwardly revised 0.2% increase (from -0.2%) in December. Residential spending was up 2.0% m/m and nonresidential spending was up 1.6% m/m.
o The key takeaway from the report is that January marked the largest m/m increase in construction spending since February 2018, bolstered by continued strength in residential spending.

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