Morning Notes – Wednesday April 15, 2020

/ April 15, 2020

Directional Bias For The Day:

  • S&P Futures are lower;
  • The odds are for a down day with elevated volatility – watch for break above 2795.00 for change of fortune
  • Key economic data due:
    • Retail Sales ( -8.7% vs. -8.0% est.; prev. -0.4%) at 8:30 AM
    • Core Retail Sales ( -4.5% vs. -4.9% est.; prev. -0.4%) at 8:30 AM
    • Empire State Manufacturing Index ( -78.2 vs. -35.2 est.; prev. -21.5) at 8:30 AM
    • Industrial Production ( -4.1% est.; prev. 0.6%) at 9:15 AM
    • Capacity Utilization ( 73.7% est.; prev. 77.0%) at 9:15 AM
    • NAHB Housing Market Index (56 est.; prev. 72) at 10:00 AM
    • Business Inventories ( -0.4% est.; prev. -0.1%) at 10:00 AM

Directional Bias Before Open:

  • Weekly: In Correction
  • Daily: In Correction
  • 120-Min: Side-Up
  • 30-Min: Up-Side
  • 15-Min: Side-Down
  • 6-Min: Down

Key Levels:

  • Critical support levels for S&P 500 are 2770.20, 2731.94 and 2721.17
  • Critical resistance levels for S&P 500 are 2795.73, 2805.10 and 2832.60
  • Key levels for eMini futures: break above 2799.25, the high of 7:00 AM and break below 2752.50, the low of 8:30 PM on Monday

Pre-Open

  • On Tuesday at 4:00 PM, S&P future (June 2020) closed at 2837.00 and the index closed at 2846.06 – a spread of about -9.00 points; futures closed at 2843.00 for the day; the fair value is -6.00
  • Pre-NYSE session open, futures are lower – at 8:45 AM, S&P 500 futures were down by -70.25; Dow by -511 and NASDAQ by -153.50

Markets Around The World

  • Markets in the East closed lower – Seoul was closed
  • European markets are lower
  • Currencies:
    Up Down
    • Dollar index
    • USD/JPY
    • USD/CHF
    • USD/CAD
    • INR/USD
    • EUR/USD
    • GBP/USD
    • AUD/USD
    • NZD/USD
  • Commodities:
    Up Down
    • Crude Oil
    • NatGas
    • Gold
    • Silver
    • Copper
    • Platinum
    • Palladium
    • Sugar
    • Coffee
    • Cotton
    • Cocoa
  • Bond
    • 10-yrs yield is at 0.681%, down from April 14 close of 0.752%;
    • 30-years is at 1.319%, down from 1.412%
    • 2-years yield is at 0.211% down from 0.215%
    • The 10-Year-&-2-Year spread is at 0.470 down from 0.537
  • VIX
    • Is at 41.81 up +4.05 from April 14 close; above 5-day SMA;
    • Down from all time high of 85.47 on March 18
    • Risk-off kind of reading

The trend and patterns on various time frames for S&P 500:

Monthly
  • Uptrend under pressure
  • March 2020 was a large red top candle with large upper and lower shadows; index declined 12.5%;
    • Stochastic %K is below %D and near 30; %K Bearish Divergence
    • RSI-9 declined from above 75 to near 30; Bearish Divergence
    • Broke below the lower band of the 120-month regression channel to middle of the band; only third time since 2009 but first close below the lower bound
  • Sequence of higher highs and higher lows broken
Weekly:
  • The week ending on April 10 was a large green candle that opened higher for the week almost no lower shadow and small upper shadows
    • Stochastic (9,1, 3): %K is above %D near40
    • RSI (9) is moving higher; near 45
  • Last week was up +301.17 or +12.1%; the 5-week ATR is 378.60
  • Last week’s pivot point=2727.65, R1=2880.74, R2=2971.65; S1=2636.74, S2=2483.65; R1/R2/R3 pivot levels were breached
  • An up week; second in last five weeks and fourth in last ten weeks
  • All time high of 3393.52, the last swing high, was during the week of February 17; broke below the low of the week of December 24, 2018; support near 2193.81, the high during the week of August 15, 2016; sequence of higher highs and higher lows broken
  • Below 10-week EMA and 39-week SMA, and 89-week SMA
  • In Correction
Daily
  • A green candle that gapped up at the open with almost no lower shadow and very small upper shadow; previous three-day Evening Star pattern is nullified
    • forming an ABCD pattern; achieved 61.8% extension target near 2725.00; 100% extension target is near 2897.00
    • %K is crossing below %D above 90
    • RSI-9 moving up in zig-zag manner; just below 60; above 8-day RSI;
  • Above 20-day EMA and 50-day EMA; below 100-day SMA and 200-day SMA;
  • In Correction; uptrend since March 23
2-Hour (e-mini future)
  • Rising in steps since April 2;
    • the 100% extension target near 2825.00 of the previously broken horizontal channel was achieved;
    • also broke above a bigger horizontal channel – from March 11 to April 6 between 2650.00 and 2174.00; the 61.8% extension target is near 2944.00 and 100% extension target is near 3126.00
    • Uptrend – high highs & higher lows – since 10:00 AM on March 23
    • RSI-21 fallen below 40 from near 65 and after making Bearish Divergence at 4:00 PM on Tuesday;  Bearish Divergence on April 8 and April 9;
    • %K is below %D; near 80
  • At/below 20-bar EMA; above EMA10 of EMA50
  • Bias: Up
30-Minute (e-mini future)
  • Moving down since 3:30 PM on Tuesday;
    • forming a small head-&-shoulder pattern; falling below the neck line at 2780.00
    • Broke above a horizontal channel between 2750.00 and 2620.75 on April 9; 61.8% extension target near 2830.00 is achieved; 100% extension target is near 2880.00
    • RSI-21 declined near 30 from above 65;
    • %K is crisscrossing %D near 30
  • Below 20-bar EMA, which is below EMA10 of EMA50
  • Bias: Up-Side
15-Minute (e-mini future)
  • Bollinger Band (20, 2.0) moving sideways to down since 4:00 PM
  • The Bollinger Band was relatively narrow from 7:00 PM to 3:15 AM; expanding since with price walking down the lower band
  • Stochastic (9, 1, 3): %K is below %D
  • Bias: Side-Down

Previous Session

Major U.S. indices closed higher on Tuesday, April 14 in mixed volume. Dow Jones Transportation Average and Russell 2000 traded in lower volume. Most indices gapped up at the open and then mostly traded higher closing near day’s highs. All S&P sectors except Energy closed higher. Most international exchanges also closed up.

From Briefing.com:

[…]

The Nasdaq Composite rose 4.0%, pulling ahead of the S&P 500 (+3.1%), Dow Jones Industrial Average (+2.4%), and Russell 2000 (+2.1%), for its fourth straight advance.

[…]

U.S. Treasuries held firm despite the bullish price action in the stock market. The 2-yr yield declined one basis point to 0.22%, and the 10-yr yield was unchanged at 0.75%. The U.S. Dollar Index declined 0.5% to 98.85.

Tuesday’s economic data was limited to Import and Export Prices for March: import prices declined 2.3%, while prices, excluding oil, were unchanged. Export prices declined 1.6% in March, and prices, excluding agriculture, declined 1.5%.

[…]
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