Directional Bias For The Day:
- S&P Futures are sharply higher; bouncing since 11:15 PM from oversold conditions
- The odds are for an up day with elevated volatility;
- Vulnerable to news and events
- Key economic data due:
- Import Prices ( -0.5% vs. -1.0% est.; prev. 0.1%) at 7:30 AM
- Prelim UoM Consumer Sentiment (est. 95.0; prev. 101.0) at 10:00 AM
- Prelim UoM Inflation Expectations (prev. 2.4%) at 10:00 AM
Directional Bias Before Open:
- Critical support levels for S&P 500 are 2554.502520.80 and 2478.86
- Critical resistance levels for S&P 500 are 2630.86, 2660.95 and 2707.22
- Key levels for eMini futures: break above 2658.75, the high of 1:00 PM on Thursday and break below 2523.00, th elow of 5:00 AM
- On Thursday, at 4:00 PM, S&P future (March 2020) closed at 2469.75 and the index closed at 2480.64 – a spread of about -11.00 points; futures closed at 2469.00 for the day; the fair value is +0.75
- Pre-NYSE session open, futures are higher – at 9:00 AM, S&P 500 futures were up by +126.00; Dow by +1110 and NASDAQ by +407.00
Markets Around The World
- Markets in the East closed mostly lower – Sydney and Mumbai are up
- European markets are higher
- Dollar index
- Crude Oil
- 10-yrs yield is at 0.938%, up from March 12 close of 0.849%;
- 30-years is at 1.549%, up from 1.407%
- 2-years yield is at 0.542% up from 0.473%
- The 10-Year-&-2-Year spread is at 0.396 up from 0.376
- Is at 65.07 down -10.40 from March 12 close; above 5-day SMA;
- At highest levels since March 2008; Next high resistance is 81.48, the high of March 2008; the low support is 55.82, the low of the gap on March 12
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 Thursday, March 12 in higher volume. Indices gapped down at the open and then mostly traded down for the day closing near the lows. Market had the worst day since October 1987.
Each of major indices dropped more than 9% on Thursday, as new stimulus measures from central banks failed to stir confidence among investors without a meaningful fiscal response from Washington. The Russell 2000 (-11.2%) led the retreat, followed by the Dow Jones Industrial Average (-10.0%), S&P 500 (-9.5%), and Nasdaq Composite (-9.4%) with each closing down more than 25% from prior highs.
For the second time this week, the S&P 500 triggered a 15-minute trading halt after falling by 7.0% shortly after the open following more economic disruptions caused by the coronavirus.
Few asset classes were safe today. The S&P 500 sectors lost between 7.4% (health care) and 12.3% (energy). WTI crude fell 4.3%, or $1.43, to $31.57/bbl. Gold futures fell 3.2% to $1589.80/ozt. The 2-yr yield was unchanged at 0.49%, and the 10-yr yield increased three basis points to 0.85% amid selling pressure. The U.S. Dollar Index rose 0.8% to 97.25.
The market wants strong and immediate action, as well as signs that the coronavirus situation will get better. The CBOE Volatility Index, which is commonly referenced as a fear gauge, surged 40.0% to 75.47– its highest level since the financial crisis — as investors rushed for more protection against further equity weakness.
• The Producer Price Index for February declined 0.6% m/m (Briefing.com consensus -0.2%) while core PPI, which excludes food and energy, declined 0.3% (Briefing.com consensus 0.1%). That left the yr/yr readings at 1.3% and 1.4%, respectively.
o The key takeaway from the report is that it was weighed down sharply by the decline in energy prices, which was prominent in final demand goods, processed goods for intermediate demand, and unprocessed goods for intermediate demand.
• Initial jobless claims decreased by 4,000 for the week ending March 7 to 211,000 (Briefing.com consensus 218,000). Continuing claims for the week ending February 29 decreased by 11,000 to 1.722 million.
o The key takeaway from the report is that the good news in it will be overlooked, as subsequent developments suggest there will be a tide of rising initial claims in coming weeks.