Morning Notes – Friday February 28, 2020

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:

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

Key Levels:

  • 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

Pre-Open

  • On Thursday, at 4:00 PM, S&P future (March 2020) closed at 2973.75 and the index closed at 2978.769 – 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
  • Currencies:
    Up Down
    • Dollar index
    • USD/CAD
    • INR/USD
    • EUR/USD
    • GBP/USD
    • USD/JPY
    • USD/CHF
    • AUD/USD
    • NZD/USD
  • Commodities:
    Up Down
    • Coffee
    • Crude Oil
    • NatGas
    • Gold
    • Silver
    • Copper
    • Platinum
    • Palladium
    • Sugar
    • Cotton
    • Cocoa
  • Bonds
    • 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
  • VIX
    • 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:

Monthly
  • Uptrend
  • January 2020 was a red shooting star like candle with long upper shadow and almost no lower shadow
    • Stochastic %K turned below %D from above 90
    • RSI-9 is above a downtrend line from January 2018 high; turning down just above 70
    • At the upper band from near the middle band of the 120-month regression channel
  • Sequence of higher highs and higher lows since February 2016 was broken in December 2018 but has resumed since then
Weekly:
  • The week ending on February 21 was a red harami candle with small lower shadow and upper shadow almost equal to the real body,. which was half the size of previous week’s real body
    • Stochastic (9,1, 3): %K crossed below %D; potential Bearish Divergence
    • RSI (9) has turned down from near 75; potential Bearish Divergence
  • Last week was down -129.52 or -3.8%; the 5-week ATR is 95.11
  • Last week’s pivot point=3296.31, R1=3347.85, R2=3445.05; S1=3199.11, S2=3147.57; S1/S2/S3 pivot levels were breached
  • A down week following two up weeks; third in last five weeks and fourth in last ten weeks
  • Near all time highs; Last swing low, 2822.12, was the low on August 5, 2019; last swing high was 3027.98, made during the week of July 22, 2019
  • Above 10-week EMA; above 39-week SMA and 89-week SMA
  • Uptrend
Daily
  • A large red candle that gapped down at the open and the gap was not filled;  upper shadow less than a quarter of the real body and no lower shadow; next support is at 2855.94, the low on October 3 2019, and then at 2822.12, the low on August 5 2019
    • %K is below %D; below 10 following Bearish Divergence few days ago
    • RSI-9 has moved below 20; below 8-day SMA;
  • Below 20-day EMA, 50-day EMA, 100-day SMA and 200-day SMA;
  • Uptrend under pressure
2-Hour (e-mini future)
  • Downtrend; moving sideways – with sharp changes in direction – since 10:00 PM; bias; near a support level around 2881.75, the low on October 10, 2019
    • RSI-21 is moving around 30
    • %K is crisscrossing %D
  • Below 20-bar EMA, which is below EMA10 of EMA50
  • Bias: Down
30-Minute (e-mini future)
  • Downtrend; Moving sideways since 11:00 PM within a 70-point range;
    • RSI-21 is moving around 30
      %K is below %D
  • Below 20-bar EMA, which is below EMA10 of EMA50
  • Bias: Down
15-Minute (e-mini future)
  • Bollinger Band (20, 2.0) is mostly moving sideways to down since 9:30 PM;
  • The Bollinger Band is expanding with price walking down the lower band
  • Stochastic (9, 1, 3): %K is below %D
  • Bias: Down

Previous Session

Major U.S. indices closed sharply lower on Thursday, February 27 in volume higher than that on Wednesday. Indices gapped down at the open and then traded down closing near the lows.

From Briefing.com:

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%).

Morning Notes – Thursday February 27, 2020

Directional Bias For The Day:

  • S&P Futures are lower; resuming the downtrend since 4:30 AM
  • The odds are for a down day with elevated volatility; watch for break above 3104.00 for change of fortune
  • Key economic data due:
    • Core Durable Goods Orders ( 0.9% vs. 0.2% est.; prev. 0.1%) at 8:30 AM
    • Durable Goods Orders ( -0.2% vs. -1.5% est.; prev. 2.9%) at 8:30 AM
    • Prelim GDP ( 2.1% vs. 2.1% est.; prev. 2.1% ) at 8:30 AM
    • Prelim GDP Price Index (1.3% vs. 1,4% est.; prev. 1.4%) at 8:30 AM
    • Unemployment Claims (219K vs. 211K est.; prev. 211K) at 8:30 AM
    • Pending Home Sales (est. 2.9% vs.; -4.9% ) at 10:00 AM

Directional Bias Before Open:

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

Key Levels:

  • 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 3084.50, the high of 7:00 AM and break below 3059.50, the low of 0:00 AM

Pre-Open

  • On Wednesday, at 4:00 PM, S&P future (March 2020) closed at 3116.25 and the index closed at 3116.39 – a spread of about -0.25 points; futures closed at 3110.25 for the day; the fair value is +6.00
  • Pre-NYSE session open, futures are lower – at 8:15 AM, S&P 500 futures were down by -45.00; Dow by -423 and NASDAQ by -16.50

Markets Around The World

  • Markets in the East closed mostly lower; Shanghai and Hong Kong closed up
  • European markets are lower
  • Currencies:
    Up Down
    • EUR/USD
    • GBP/USD
    • AUD/USD
    • NZD/USD
    • USD/CAD
    • Dollar index
    • USD/JPY
    • USD/CHF
    • INR/USD
  • Commodities:
    Up Down
    • Gold
    • Silver
    • Platinum
    • Palladium
    • Coffee
    • Cocoa
    • Crude Oil
    • NatGas
    • Copper
    • Sugar
    • Cotton
  • Bonds
    • 10-yrs yield closed at 1.310%, down from February 25 close of 1.330%;
    • 30-years is at 1.796%, down from 1.804%
    • 2-years yield is at 1.172%, down from 1.186%
    • The 10-Year-&-2-Year spread is at 0.138 down from 0.144
  • VIX
    • Is at 30.11 up +2.55 from February 25 close; above 5-day SMA;
    • AT highest level since December 2018; Next high resistance is 30.25, the high of February 25; the low support is the lower high of the gap at 18.88, the high of February 3

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

Monthly
  • Uptrend
  • January 2020 was a red shooting star like candle with long upper shadow and almost no lower shadow
    • Stochastic %K turned below %D from above 90
    • RSI-9 is above a downtrend line from January 2018 high; turning down just above 70
    • At the upper band from near the middle band of the 120-month regression channel
  • Sequence of higher highs and higher lows since February 2016 was broken in December 2018 but has resumed since then
Weekly:
  • The week ending on February 21 was a red harami candle with small lower shadow and upper shadow almost equal to the real body,. which was half the size of previous week’s real body
    • Stochastic (9,1, 3): %K crossed below %D; potential Bearish Divergence
    • RSI (9) has turned down from near 75; potential Bearish Divergence
  • Last week was down -129.52 or -3.8%; the 5-week ATR is 95.11
  • Last week’s pivot point=3296.31, R1=3347.85, R2=3445.05; S1=3199.11, S2=3147.57; S1/S2/S3 pivot levels were breached
  • A down week following two up weeks; third in last five weeks and fourth in last ten weeks
  • Near all time highs; Last swing low, 2822.12, was the low on August 5, 2019; last swing high was 3027.98, made during the week of July 22, 2019
  • Above 10-week EMA; above 39-week SMA and 89-week SMA
  • Uptrend
Daily
  • A red candle with large upper shadow and small lower shadows; next support is at 3070.33, the low of December 3
    • %K is below %D; below 10 following Bearish Divergence few days ago
    • RSI-9 has moved below 20; below 8-day SMA;
  • Below 20-day EMA, 50-day EMA and 100-day SMA; above 200-day SMA;
  • Uptrend under pressure
2-Hour (e-mini future)
  • Moving sideways – with sharp changes in direction – since 8:00 PM; down bias; near a support level around 3069.00, the low of December 3
    • RSI-21 is moving around 30
    • %K is crisscrossing %D below 20
  • Below 20-bar EMA, which is below EMA10 of EMA50
  • Bias: Down
30-Minute (e-mini future)
  • Moving sideways since 8:00 PM within a 50-point range;
    • RSI-21 is moving between 30 and 40
    • %K is below %D since 5:00 AM; crossing above it at 8:00 AM
  • Below 20-bar EMA, which is below EMA10 of EMA50
  • Bias: Down
15-Minute (e-mini future)
  • Bollinger Band (20, 2.0) is mostly moving sideways to down since 1:45 AM;
  • The Bollinger Band is expanding with price walking down the lower band
  • Stochastic (9, 1, 3): %K is crisscrossing %D lower
  • Bias: Down

Previous Session

Major U.S. indices closed mostly lower on Wednesday, February 26 in volume lower than that on Tuesday. NASDAQ Composite eked out a gain. Indices open up higher from previous day and rose nearly 1.5% but then turned back down in late morning. For rest of the day they traded down and closed near the lows of the day. The futures continued the slide till midnight.

From Briefing.com:

The S&P 500 advanced as much as 1.7% on Wednesday, as investors tried to buy an oversold market, but pestering worries about the coronavirus left the benchmark index down 0.4% for the session. The Nasdaq Composite (+0.2%) eked out a slim gain, while the Dow Jones Industrial Average (-0.5%) and Russell 2000 (-1.2%) joined the S&P 500 in negative territory.

[…]

All 11 S&P 500 sectors had traded in the green, but only the information technology sector (+0.4%) was able to finish in positive territory thanks to strength in Apple (AAPL 292.65, +4.57, +1.6%) and Microsoft (MSFT 170.17, +2.10, +1.3%). The energy sector dropped 3.0% amid continued weakness in oil prices ($48.70, -1.19, -2.4%).

[…]

U.S. Treasuries were less in focus today, but the continued gains in the bond market weren’t conducive for risk sentiment. The 2-yr yield declined five basis points to 1.15%, and the 10-yr yield declined two basis points to 1.31%. The U.S. Dollar Index increased 0.2% to 99.13.

[…]

• New home sales increased 7.9% m/m in January to a seasonally adjusted annual rate of 764,000 units (Briefing.com consensus 720,000) from an upwardly revised 708,000 (from 694,000) in December.
o The key takeaway from the report is that new home sales were also strong on a year-over-year basis (+18.6%), benefiting from the drop in mortgage rates and the extremely tight supply of existing homes for sale.
• The weekly MBA Mortgage Applications Index increased 1.5% following a 6.4% decline in the prior week.

Morning Notes – Wednesday February 26, 2020

Directional Bias For The Day:

  • S&P Futures are higher; bouncing off since 4:00 AM from oversold levels; up more than 50 points
  • The odds are for an up to sideways day with elevated volatility; watch for break below 3122.25 for change of fortune
  • Key economic data due:
    • New Home Saes ( est. 714K; prev. 694K ) at 10:00 AM
    • &P/CS Composite-20 HPI ( 2.85% vs. 2.8% est.; prev. 2.6%) at 9:00 AM
    • CB Consumer Confidence ( est. 132.6 ; prev. 131.6) at 10:00 AM
    • Richmond Fed Manufacturing Index ( est. 10; prev. 10) at 10:00 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 3118.77, 3108.40 and 3102.53
  • Critical resistance levels for S&P 500 are 3141.44, 3156.88 and 3177.22
  • Key levels for eMini futures: break above 3149.75, the high of 8:30 AM and break below 3122.25, the low of 7:30 AM

Pre-Open

  • On Tuesday, at 4:00 PM, S&P future (March 2020) closed at 3127.75 and the index closed at 3128.21 – a spread of about -0.50 points; futures closed at 3132.50 for the day; the fair value is -4.75
  • Pre-NYSE session open, futures are higher – at 8:45 AM, S&P 500 futures were up by +6.00; Dow by +42 and NASDAQ by +30.75

Markets Around The World

  • Markets in the East closed lower;
  • European markets are mostly lower – Spain and Italy are up
  • Currencies:
    Up Down
    • Dollar index
    • USD/JPY
    • USD/CAD
    • EUR/USD
    • GBP/USD
    • USD/CHF
    • AUD/USD
    • NZD/USD
    • INR/USD
  • Commodities:
    Up Down
    • NatGas
    • Palladium
    • Crude Oil
    • Gold
    • Silver
    • Copper
    • Platinum
    • Sugar
    • Coffee
    • Cotton
    • Cocoa
  • Bonds
    • 10-yrs yield closed at 1.364%, down from February 24 close of 1.377%;
    • 30-years is at 1.849%, up from 1.837%
    • 2-years yield is at 1.186%, down from 1.252%
    • The 10-Year-&-2-Year spread is at 0.178 up from 0.125
  • VIX
    • Is at 25.79 down -2.06 from February 25 close; above 5-day SMA;
    • Next high resistance is 30.25, the high of February 25; the low support is the lower high of the gap at 18.88, the high of February 3

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

Monthly
  • Uptrend
  • January 2020 was a red shooting star like candle with long upper shadow and almost no lower shadow
    • Stochastic %K turned below %D from above 90
    • RSI-9 is above a downtrend line from January 2018 high; turning down just above 70
    • At the upper band from near the middle band of the 120-month regression channel
  • Sequence of higher highs and higher lows since February 2016 was broken in December 2018 but has resumed since then
Weekly:
  • The week ending on February 21 was a red harami candle with small lower shadow and upper shadow almost equal to the real body,. which was half the size of previous week’s real body
    • Stochastic (9,1, 3): %K crossed below %D; potential Bearish Divergence
    • RSI (9) has turned down from near 75; potential Bearish Divergence
  • Last week was down -129.52 or -3.8%; the 5-week ATR is 95.11
  • Last week’s pivot point=3296.31, R1=3347.85, R2=3445.05; S1=3199.11, S2=3147.57; S1/S2/S3 pivot levels were breached
  • A down week following two up weeks; third in last five weeks and fourth in last ten weeks
  • Near all time highs; Last swing low, 2822.12, was the low on August 5, 2019; last swing high was 3027.98, made during the week of July 22, 2019
  • Above 10-week EMA; above 39-week SMA and 89-week SMA
  • Uptrend
Daily
  • A large red candle with small upper and lower shadows; next support is at 3070.33, the low of December 3
    • %K is below %D; below 10 following Bearish Divergence
    • RSI-9 has moved below 20; below 8-day SMA;
  • Below 20-day EMA, 50-day EMA and 100-day SMA; above 200-day SMA;
  • Uptrend under pressure
2-Hour (e-mini future)
  • Moving sideways – with sharp changes in direction – since 2:00 PM on Tuesday; range is large – between 3160.00 and 3090.00;  the support is near 3069.00, the low of December 3
    • RSI-21 is bouncing up from near 10; made Bullish Divergence at 4:00 AM’ nearing 40
    • %K is above %D since 4:00 AM
  • Below 20-bar EMA, which is below EMA10 of EMA50
  • Bias: Down-Side
30-Minute (e-mini future)
  • Moving sideways since 2:00 PM on Tuesday with extreme volatility;
    • RSI-21 is moving up since 2:00 PM from near 20; made Bullish Divergence at 4:00 AM
    • %K is above %D since 4:00 AM
  • Below 20-bar EMA, which is below EMA10 of EMA50
  • Bias: Down-Side
15-Minute (e-mini future)
  • Bollinger Band (20, 2.0) is mostly moving sideways since 7:45 PM on February 25;
  • The Bollinger Band narrowed from 7:45 PM to 3:30 AM; expanding since with price first walking down the lower band till 4:15 AM and then moving up to the upper band
  • Stochastic (9, 1, 3): %K is crisscrossing %D higher from near 50
  • Bias: Side

Previous Session

Major U.S. indices closed sharply lower on Tuesday, February 25 in higher volume for the second day. Indices bounced up at the open but it did not last and they reversed course in the first half hour of trading and traded down for the rest of the day and closed near day’s lows. Dow Jones Industrial Average breached the lows of December and others are nearing their December lows. NASDAQ Composite is holding better relatively though it too has breached the lows of January.

From Briefing.com:

U.S. stocks sold off again on Tuesday, as the global spread of the coronavirus continued to undermine growth expectations and exacerbate the flight for safety in Treasuries. The Nasdaq Composite (-2.8%) turned negative for the year while the S&P 500 (-3.0%), Dow Jones Industrial Average (-3.2%), and Russell 2000 (-3.5%) dropped at least 3.0%.

[…]

All 11 S&P 500 sectors finished with steep losses ranging from 1.8% (consumer staples) to 4.3% (energy).

[…]

Elsewhere, the rally in U.S. Treasuries persisted amid the underlying growth concerns. The 2-yr yield fell six basis points to 1.20%, and the 10-yr yield fell five basis points 1.33% after setting a record low at 1.31%. The U.S. Dollar Index fell 0.4% to 98.96. WTI crude fell back below $50 per barrel, closing the session down 2.7%, or $1.36, at $49.89/bbl.

[…]

• The Conference Board’s Consumer Confidence Index increased to 130.7 in February (Briefing.com consensus 132.0) from a revised 130.4 (from 131.6) in January.
o The key takeaway from the report is that it did not show a significant change in sentiment when factoring in the revision to the January reading.
• The S&P Case-Shiller Home Price Index increased 2.9% in December (Briefing.com consensus 3.2%).
• The FHFA Housing Price Index increased 0.6% in December.

Morning Notes – Tuesday February 25, 2020

Directional Bias For The Day:

  • S&P Futures are higher; bouncing off oversold levels
  • The odds are for an up to sideways day with elevated volatility; watch for break below 3220.25 for change of fortune
  • Key economic data due:
    • HPI ( 0.6% vs. 0.4% est.; prev. 0.2% ) at 9:00 AM
    • S&P/CS Composite-20 HPI ( 2.85% vs. 2.8% est.; prev. 2.6%) at 9:00 AM
    • CB Consumer Confidence ( est. 132.6 ; prev. 131.6) at 10:00 AM
    • Richmond Fed Manufacturing Index ( est. 10; prev. 10) at 10:00 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 225.82, 3214.65 and 3205.38
  • Critical resistance levels for S&P 500 are 3253.58, 3259.81 and 3280.61
  • Key levels for eMini futures: break above 3259.50, the high of 8:30 PM and break below 3220.25, the low of 5:30 AM

Pre-Open

  • On Monday, at 4:00 PM, S&P future (March 2020) closed at 3225.50 and the index closed at 3225.89 – a spread of about -0.50 points; futures closed at 3226.25 for the day; the fair value is -1.00
  • Pre-NYSE session open, futures are higher – at 8:30 AM, S&P 500 futures were up by +12.75; Dow by +133 and NASDAQ by +67.75

Markets Around The World

  • Markets in the East closed mixed – Shanghai, Tokyo, Sydney and Mumbai closed lower; Hong Kong, Seoul and Singapore closed higher;
  • European markets are lower
  • Currencies:
    Up Down
    • GBP/USD
    • Dollar index
    • EUR/USD
    • USD/JPY
    • USD/CHF
    • AUD/USD
    • NZD/USD
    • USD/CAD
    • INR/USD
  • Commodities:
    Up Down
    • NatGas
    • Palladium
    • Crude Oil
    • Gold
    • Silver
    • Copper
    • Platinum
    • Sugar
    • Coffee
    • Cotton
    • Cocoa
  • Bonds
    • 10-yrs yield closed at 1.366%, down from February 21 close of 1.471%;
    • 30-years is at 1.831%, down from 1.918%
    • 2-years yield is at 1.252%, down from 1.350%
    • The 10-Year-&-2-Year spread is at 0.114 down from 0.121
  • VIX
    • Is at 23.19 down -1.84 from February 24 close; above 5-day SMA;
    • Next high resistance is 26.35, the high of February 24; the low support is the lower high of the gap at 18.88, the high of February 3

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

Monthly
  • Uptrend
  • January 2020 was a red shooting star like candle with long upper shadow and almost no lower shadow
    • Stochastic %K turned below %D from above 90
    • RSI-9 is above a downtrend line from January 2018 high; turning down just above 70
    • At the upper band from near the middle band of the 120-month regression channel
  • Sequence of higher highs and higher lows since February 2016 was broken in December 2018 but has resumed since then
Weekly:
  • The week ending on February 21 was a red harami candle with small lower shadow and upper shadow almost equal to the real body,. which was half the size of previous week’s real body
    • Stochastic (9,1, 3): %K crossed below %D; potential Bearish Divergence
    • RSI (9) has turned down from near 75; potential Bearish Divergence
  • Last week was down -129.52 or -3.8%; the 5-week ATR is 95.11
  • Last week’s pivot point=3296.31, R1=3347.85, R2=3445.05; S1=3199.11, S2=3147.57; S1/S2/S3 pivot levels were breached
  • A down week following two up weeks; third in last five weeks and fourth in last ten weeks
  • Near all time highs; Last swing low, 2822.12, was the low on August 5, 2019; last swing high was 3027.98, made during the week of July 22, 2019
  • Above 10-week EMA; above 39-week SMA and 89-week SMA
  • Uptrend
Daily
  • A relatively large red candle that gapped down at the open; almost no upper shadow and very small lower shadow; near the support created by the lows of January 31 and December 31
    • %K is below %D; below 10; Bearish Divergence
    • RSI-9 has turned below 30; below 8-day SMA;
  • Below 20-day EMA and 50-day EMA; above 100-day SMA and 200-day SMA;
  • Uptrend under pressure
2-Hour (e-mini future)
  • Moving sideways – with sharp changes in direction – since 4:00 AM on Monday after the gap down open for the week on Sunday evening; near a support level made by the lows of late January early February
    • RSI-21 bounced up from near 10 to just below 40
    • %K is crisscrossing %D lower
  • Below 20-bar EMA, which is below EMA10 of EMA50
  • Bias: Down-Side
30-Minute (e-mini future)
  • Moving sideways since 4:00 AM on Monday between 3266.00 and 3215.00;
    • RSI-21 is moving up from below 20 and after making Bullish Divergence at 1:00 PM on Monday; near 40
    • %K is above %D since 5:00 AM
  • At/below 20-bar EMA, which is below EMA10 of EMA50
  • Bias: Down-Side
15-Minute (e-mini future)
  • Bollinger Band (20, 2.0) is mostly moving sideways since 8:45 AM on February 24;
  • The Bollinger Band narrowed from 11:30 PM to 3:15 AM; expanding since with price first walking down the lower band till 5:45 AM and then moving up to the upper band
  • Stochastic (9, 1, 3): %K is crisscrossing %D near 80
  • Bias: Side

Previous Session

Major U.S. indices closed lower on Monday, February 24 in higher volume. Indices gapped down at the open and then traded down closing near day’s lows. Most are at support created by the lows of January and February.

From Briefing.com:

The stock market sold off more than 3% on Monday following a surge in coronavirus cases outside China, including South Korea, Italy, and Iran. The Dow Jones Industrial Average (-3.6%), S&P 500 (-3.4%), and Russell 2000 (-3.0%) each turned negative for the year, while the Nasdaq Composite (-3.7%) gave up most of its monthly gains.

[…]

South Korea’s Kospi fell 3.9%, and Italy’s MIB fell 5.4%. China’s Shanghai Composite declined just 0.3% amid reports that the rate of new coronavirus cases may have peaked in the region.

[…]

In turn, de-risking efforts were widespread with all 11 S&P 500 sectors finishing in negative territory, including seven that dropped at least 3.0%. The energy (-4.7%), information technology (-4.2%), and consumer discretionary (-3.5%) sectors led the retreat, while the utilities sector (-1.2%) declined the least.

[…]

Away from equities, investors continued to seek safety in gold ($1676.70/ozt, +27.80, +1.7%) and U.S. Treasuries given the growth concerns and weakness in stocks. Hedging interest against further downside was also on full display by the 46.6% surge in the CBOE Volatility Index (25.03, +7.95).

The 2-yr yield and the 10-yr yield fell nine basis points each to 1.26% and 1.38%, respectively. The U.S. Dollar Index finished flat at 99.30. WTI crude dropped 3.9%, or $2.09, to $51.25/bbl.

[…]

Investors did not receive any economic data on Monday.

[…]

Morning Notes – Monday February 24, 2020

Directional Bias For The Day:

  • S&P Futures are sharply lower;
  • The odds are for a down day with elevated volatility;
    • good chance of a bounce at the open from pre-open lows
    • News from China/South Korea is affecting the sentiments
  • No key economic data due:

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 3235.66, 3214.68 and 3205.38
  • Critical resistance levels for S&P 500 are 3256.33, 3259.30 and 3280.61
  • Key levels for eMini futures: break above 3265.75, the high of 7:00 AM and break below 3232.75, the low of 4:00 AM on February 3

Pre-Open

  • On Friday, at 4:00 PM, S&P future (March 2020) closed at 3337.00 and the index closed at 3337.75 – a spread of about -0.75 points; futures closed at 3339.25 for the day; the fair value is -2.25
  • Pre-NYSE session open, futures are lower – at 9:00 AM, S&P 500 futures were down by -93.75; Dow by -838 and NASDAQ by -292.75

Markets Around The World

  • Markets in the East closed lower – Tokyo was closed for trading;
  • European markets are lower
  • Currencies:
    Up Down
    • EUR/USD
    • USD/CAD
    • INR/USD
    • Dollar index
    • GBP/USD
    • USD/JPY
    • USD/CHF
    • AUD/USD
    • NZD/USD
  • Commodities:
    Up Down
    • Gold
    • Silver
    • Crude Oil
    • NatGas
    • Copper
    • Platinum
    • Palladium
    • Sugar
    • Coffee
    • Cotton
    • Cocoa
  • Bonds
    • 10-yrs yield is at 1.376%, down from February 21 close of 1.471%;
    • 30-years is at 1.823%, down from 1.918%
    • 2-years yield is at 1.260%, down from 1.350%
    • The 10-Year-&-2-Year spread is at 0.116 down from 0.121
  • VIX
    • Is at 22.45 up +5.37 from February 21 close; above 5-day SMA; gapped up at the week’s open
    • Next high resistance is 24.81, the high of August 5, 2019; the low support is the lower high of the gap at 18.88, the high of February 3

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

Monthly
  • Uptrend
  • January 2020 was a red shooting star like candle with long upper shadow and almost no lower shadow
    • Stochastic %K turned below %D from above 90
    • RSI-9 is above a downtrend line from January 2018 high; turning down just above 70
    • At the upper band from near the middle band of the 120-month regression channel
  • Sequence of higher highs and higher lows since February 2016 was broken in December 2018 but has resumed since then
Weekly:
  • The week ending on February 21 was a red harami candle with small lower shadow and upper shadow almost equal to the real body,. which was half the size of previous week’s real body
    • Stochastic (9,1, 3): %K crossed below %D; potential Bearish Divergence
    • RSI (9) has turned down from near 75; potential Bearish Divergence
  • Last week was down -129.52 or -3.8%; the 5-week ATR is 95.11
  • Last week’s pivot point=3296.31, R1=3347.85, R2=3445.05; S1=3199.11, S2=3147.57; S1/S2/S3 pivot levels were breached
  • A down week following two up weeks; third in last five weeks and fourth in last ten weeks
  • Near all time highs; Last swing low, 2822.12, was the low on August 5, 2019; last swing high was 3027.98, made during the week of July 22, 2019
  • Above 10-week EMA; above 39-week SMA and 89-week SMA
  • Uptrend
Daily
  • A relatively large red candle that opened below the previous close and never tested it; almost the whole real body was within the lower shadow or Thursday; no upper shadow and small lower shadow;
    • %K is below %D; below 30; Bearish Divergence
    • RSI-9 has turned below 50; below 8-day SMA;
  • At/above 20-day EMA, 50-day EMA, 100-day SMA and 200-day SMA;
  • Uptrend under pressure
2-Hour (e-mini future)
  • Moving down after down gap open for the week on Sunday evening; nearing the support level made by the lows of late January early February
    • RSI-21 is trending down since 6:00 PM on Fabruary 19 from above 70 to below 20
    • %K is crisscrossing %D lower
  • Below 20-bar EMA, which is below EMA10 of EMA50
  • Bias: Down
30-Minute (e-mini future)
  • Sharp waterfall down since 7:00 PM on February 19
    • RSI-21 is trending down from near 65 to near 20
    • %K crisscrossing %D around or below 20
  • Below 20-bar EMA, which is below EMA10 of EMA50
  • Bias: Down
15-Minute (e-mini future)
  • Bollinger Band (20, 2.0) is mostly moving down since 10:45 AM on February 20; sharp down leg since 2:15 AM
  • The Bollinger Band was narrow from 11:00 PM to 2:15 AM; expanding since with price mostly walking down the lower band
  • Stochastic (9, 1, 3): %K is below %D since 7:00 AM; potential for Bullish Divergence at the open
  • Bias: Down

Previous Session

Major U.S. indices closed lower on Friday, February 21 in mostly higher volume. Indices opened down and then for most of the day traded down. Some indices closed up from the day’s lows others close near the lows. Russell 2000 traded in lower volume. All but three S&P sectors – Consumer Staples, Healthcare and Real Estate – closed down for the day.

For the week, most major U.S. indices closed lower in mixed volume. Dow Jones Transportation Average closed up. S&P 500 and NASDAW Composite traded in higher volume. European bourses closed lower for the week. Most Asian exchanges also closed down – Shanghai and Sydney closed up for the week. Only two S&P sectors – Real Estate and Telecom – closed up for the week.

From Briefing.com:

U.S. stocks sold off to end the week, while investors continued to buy less risky assets, amid pestering concerns about the coronavirus and valuation. The Nasdaq Composite led the retreat with a 1.8% decline, followed by the S&P 500 (-1.1%), Russell 2000 (-1.0%), and Dow Jones Industrial Average (-0.8%).

[…]

The top-weighted S&P 500 information technology sector (-2.3%) was today’s outright laggard amid broad-based selling. The gains in the real estate (+0.4%) and consumer staples (+0.3%) sectors reflected the market’s defensive posture and helped limit the broader decline.

[…]

U.S. Treasuries, as previously stated, continued to post gains. The 2-yr yield declined four basis points to 1.35%, and the 10-yr yield declined five basis points to 1.47%. The U.S. Dollar Index fell 0.5% to 99.32. WTI crude declined 0.7%, or $0.40, to $53.34/bbl.

[…]

• Existing home sales decreased 1.3% m/m in January to a seasonally adjusted annual rate of 5.46 million units (Briefing.com consensus 5.42 million) from a downwardly revised 5.53 million (from 5.54 million) in December. Total sales were up 9.6% year-over-year.
o The key takeaway from the report is that the housing inventory for January was at its lowest level since 1999, demonstrating that there are serious inventory constraints in the existing home sales market, which is driving up prices and underscoring the importance of mortgage rates staying low for affordability purposes.