Morning Notes – Tuesday March 12, 2019

Directional Bias For The Day:

• S&P Futures are higher; moving mostly sideways to down since reaching a high of 2799.00 at 6:30 PM on Monday
• Odds are for a sideways to down day with elevated volatility – watch for break above 27497.00 and below 2785.50 for clarity
• Key economic data due:
  • Core CPI (0.1% vs. 0.2% est.; prev. 0.0%) at 8:30 AM
  • CPI  (0.2% vs. 0.2% est.; prev. 0.0% ) at 8:30 AM

Markets Around The World

• Markets in the East closed mostly up – Sydney was down
• European markets are mostly lower – U.K is up
• Currencies:
  

  Up	Down
  EUR/USD USD/JPY AUD/USD NZD/USD	Dollar index GBP/USD USD/CHF USD/CAD USD/INR

• Commodities:
  

  Up	Down
  Crude Oil Gold Silver Copper Platinum Palladium Coffee Cotton	NatGas Sugar Cocoa

• Bonds
  • 10-yrs yield is at 2.636%, down from March 11 close of 2.654%;
  • 30-years is at 3.026%, down from 3.042%
  • 2-years yield is at 2.459%, down from 2.619%
  • The 10-Year-&-2-Year spread is at 0.177, down from 0.179

Key Levels:

• Critical support levels for S&P 500 are 2773.82, 2747.61 and 2731.03
• Critical resistance levels for S&P 500 are 2796.44, 2806.27 and 2816.88
• Key levels for eMini futures: break above 2797.00, the high of 3:30 AM and break below 2785.50, the low of 7:00 AM

Pre-Open

• On Monday, at 4:00 PM, S&P future (June contract) closed at 2788.00 and the index closed at 2783.30 – a spread of about +4.75 points; futures closed at 2789.00 for the day; the fair value is -1.00
• Pre-NYSE session open, futures price action is mixed – at 8:30 AM, S&P 500 futures were up by +5.50; Dow down by -33; and NASDAQ up by +23.00

Directional Bias Before Open

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

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

Previous Session

Major U.S. indices closed higher on Monday March 11 in mostly higher volume. S&P 500 and NASDAQ Composite traded in lower volume. The day’s range was relatively large. Most indices gapped up at the open and then moved higher for the rest of the day and formed a potential three-day morning star pattern. Dow Jones Industrial Average made a bullish engulfing candle.

From Briefing.com:

The S&P 500 gained 1.5% on Monday in a buy-the-dip trade following the market’s decline from last week. Underpinning the broad-based advance was some reassurance from Fed Chair Jerome Powell, the outperformance of mega-cap and semiconductor stocks, and the market’s resilience in the face of an early 13.5% decline in shares of Boeing (BA 400.01, -22.53, -5.3%).

The Nasdaq Composite gained 2.0%, and the Russell 2000 gained 1.8%. The Dow Jones Industrial Average overcame an early loss of 1.0% to finish higher by 0.8%, closing at session highs along with the other major indices.

All 11 S&P 500 sectors finished higher with gains ranging from 0.7% (utilities) to 2.2% (information technology).

[…]

Separately, today’s rebound drove both the S&P 500 and Nasdaq Composite back above their 200-day moving averages, which was regarded as a positive technical move.

[…]

U.S. Treasuries closed on a lower note, pushing yields higher across the curve. The 2-yr yield increased three basis points to 2.47%, and the 10-yr yield increased two basis points to 2.64%. The U.S. Dollar Index declined 0.1% to 97.18.

WTI crude rose 1.2% to $56.80/bbl amid plans from Saudi Arabia to cut oil exports in April and its expectations that OPEC+ will not change its output policy at the next meeting.

Reviewing Monday’s economic data, which included Retail Sales for January and Business Inventories for December:
• In January, retail sales increased 0.2% (Briefing.com consensus -0.1%). Excluding autos, they rose 0.9% (Briefing.com consensus +0.2%). The headline strength in January, however, was offset some by downward revisions to the prior month that indicated retail sales fell 1.6% in December (prior -1.2%) and declined 2.1% excluding autos (prior -1.8%).
o The key takeaway from the report is that core retail sales, which exclude auto, gasoline station, building materials, and food services and drinking places sales, increased a solid 1.1%. That component factors into the goods component for personal consumption expenditures, so it will likely prompt some upgrades to Q1 GDP forecasts.
• Total business inventories increased 0.6% in December, as expected by the Briefing.com consensus estimate, following an upwardly revised unchanged reading (from -0.1%) for November. Total business sales fell 1.0% after declining a downwardly revised 0.6% (from -0.3%) in November.
o The key takeaway from the report is that business sales declined as inventories increased. That distinction, if it persists, will diminish pricing power.

[…]

• S&P 500 Sectors