Morning Notes – Wednesday April 22, 2020

Directional Bias For The Day:

  • S&P Futures are higher; rising since 8:00 PM
  • The odds are for an up day with elevated volatility – watch for break below 2728.25 for change of fortune
  • Key economic data due:
    • HPI ( 0.4% est.; prev. 0.3%) at 9:00 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 2760.75, 2732.79 and 2727.10
  • Critical resistance levels for S&P 500 are 2785.54, 2805.87 and 2820.43
  • Key levels for eMini futures: break above 2777.50, the high of 9:30 AM on Tuesday and break below 2728.25, the low of 0:30 AM


  • On Tuesday at 4:00 PM, S&P future (June 2020) closed at 2727.00 and the index closed at 2736.56 – a spread of about -9.50 points; futures closed at 2732.00 for the day; the fair value is -5.00
  • Pre-NYSE session open, futures are higher – at 6:45 AM, S&P 500 futures were up by +31.00; Dow by +239 and NASDAQ by +93.50

Markets Around The World

  • Markets in the East closed mixed – Shanghai, Hong Kong, Mumbai and Seoul closed up; Tokyo, Sydney and Singapore closed down
  • European markets are higher
  • Currencies:
    Up Down
    • EUR/USD
    • GBP/USD
    • AUD/USD
    • NZD/USD
    • Dollar index
    • USD/JPY
    • USD/CHF
    • USD/CAD
    • INR/USD
  • Commodities:
    Up Down
    • Crude Oil
    • Gold
    • Silver
    • Copper
    • Platinum
    • Coffee
    • Cotton
    • Cocoa
    • NatGas
    • Palladium
    • Sugar
  • Bond
    • 10-yrs yield closed at 0.571%, down from April 20 close of 0.626%;
    • 30-years is at 1.162%, down from 1.237%
    • 2-years yield is at 0.205% down from 0.214%
    • The 10-Year-&-2-Year spread is at 0.366 down from 0.412
  • VIX
    • Is at 44.35 down -1.06 from April 21 close; above 5-day SMA;
    • Down from all time high of 85.47 on March 18
    • Risk-Neutral to Risk-On

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

  • 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
  • The week ending on April 17 was a green candle with almost no upper shadow and lower shadow that was two-third of the real body;
    • Stochastic (9,1, 3): %K is above %D above 50
    • RSI (9) is moving higher; near 50
  • Last week was up +84.74 or +3.0%; the 5-week ATR is 311.50
  • Last week’s pivot point=2824.98, R1=2928.80, R2=2983.03; S1=2770.75, S2=2666.93; No pivot levels were breached
  • An up week; third in last five weeks and fifth 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
  • Above 10-week EMA; below 39-week SMA, and 89-week SMA
  • In Correction
  • A red candle that gapped down with almost no upper and lower shadows
    • forming an ABCD pattern (A on March 23, B on March31 and C on April 2); achieved 61.8% extension target near 2725.00; 100% extension target is near 2897.00
    • %K is below %D after Bearish Divergence
    • RSI-9 turning down; moving up in zig-zag manner; near 50; below 8-day RSI;
  • Above 20-day EMA; below 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; broke above resistance level of 2846.00 on April 16 but is now below it; broke below an uptrend line from April 2
    • broke above a 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
    • Sequence of higher highs & higher lows since 10:00 AM on March 23 is broken
    • RSI-21 rising from below 25 to near 50; Bullish Divergence at 8:00 PM on Tuesday
    • %K is above %D above 75
  • At/below 20-bar EMA; below EMA10 of EMA50
  • Bias: Up-Side
30-Minute (e-mini future)
  • Broke above a Double Bottom chart pattern at 4:00 AM; 61.8% extension target near 2775.00 is achieved; the 100% extension target is near 2790.00 and 161.8% extension target is near 2812.00
    • RSI-21 rising since 11:00 AM on Tuesday from 30; Bullish Divergence at 8:00 PM; above 50
    • %K is below %D since 5:00 AM
  • Above EMA10 of EMA50, which is above 20-bar EMA
  • Bias: Down-Side
15-Minute (e-mini future)
  • Bollinger Band (20, 2.0) moving sideways to up since 4:45 PM on Tuesday
  • The Bollinger Band narrowed from 4:00 PM to 1:15 AM; expanding since with price walking up the upper band
    • Stochastic (9, 1, 3): %K is below %D; below 20
  • Bias: Down-Side

Previous Session

Major U.S. indices closed lower on Tuesday, April 21 in mixed volume. Dow Jones Transportation Average and Russell 2000 traded in lower volume.

Indices opened lower with a gap and then mostly traded lower and closed near day/s lows. All S&P sectors closed lower. Global exchanges were also down and most commodities too. Treasury yields fell.


The S&P 500 fell 3.1% on Tuesday, closing near session lows for its second straight decline, as risk sentiment remained suppressed by the ongoing turmoil in the oil futures market. The Dow Jones Industrial Average declined 2.7%, the Nasdaq Composite declined 3.5%, and the Russell 2000 declined 2.3%.

The May WTI contract officially expired at $10.01/bbl after falling negative yesterday, but the fundamental problems that drove the contract into negative territory continued to plague the rest of the WTI futures curve. The June WTI contract plunged 43.0%, or $8.70, to $11.57/bbl, although it did touch $6.50/bbl at its low.


In the U.S. Treasury market, longer-dated tenors continued to exhibit strength in a safety trade. The 2-yr yield declined one basis point to 0.20%, and the 10-yr yield declined six basis points to 0.57%. The U.S. Dollar Index increased 0.2% to 100.17.


• Existing home sales declined 8.5% m/m in March to a seasonally adjusted annual rate of 5.27 million ( consensus 5.35 million). Total sales were up 0.8% year-over-year, marking the ninth straight month that they have increased on a year-over-year basis.
o The key takeaway from the report is that it showed existing home sales activity was relatively soft before the COVID-19 impact, with low inventory and high prices crimping sales. Existing home sales are counted when the deals are closed, so the sales activity for March is predicated mostly on contracts signed in January and February.

Print Friendly, PDF & Email