Market Remarks

Morning Notes – Tuesday March 19, 2019

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are higher; moving  sideways since 6:45 AM
  • Odds are for a sideways to an up day – watch for break below 2847.50 for change of fortune
  • Key economic data due:
    • Start of two-day FOMC meeting

Markets Around The World

  • Markets in the East closed mixed – Shanghai, Tokyo, Sydney and Seoul closed down; Hong Kong, Mumbai and Singapore closed up
  • European markets are higher
  • Currencies:
    Up Down
    • EUR/USD
    • GBP/USD
    • AUD/USD
    • NZD/USD
    • USD/INR
    • Dollar index
    • USD/JPY
    • USD/CHF
    • USD/CAD
  • Commodities:
    Up Down
    • Crude Oil
    • NatGas
    • Palladium
    • Gold
    • Silver
    • Copper
    • Platinum
    • Coffee
    • Cotton
    • Cocoa
    • Sugar
  • Bonds
    • 10-yrs yield is at 2.632%, up from March 18 close of 2.602%;
    • 30-years is at 3.049%, up from 3.011%
    • 2-years yield is at 2.462%, down from 2.458%
    • The 10-Year-&-2-Year spread is at 0.170, up from 0.144

Key Levels:

  • Critical support levels for S&P 500 are 2827.56, 2818.26 and 2810.79
  • Critical resistance levels for S&P 500 are 2844.69, 2856.32 and 2862.08
  • Key levels for eMini futures: break above 2843.00, the high of 6:30 AM and break below 2847.50, the low of 6:00 AM

Pre-Open

  • On Monday, at 4:00 PM, S&P future (June contract) closed at 2838.50 and the index closed at 2832.94 – a spread of about +5.50 points; futures closed at 2840.50 for the day; the fair value is -2.00
  • Pre-NYSE session open, futures price action is to the upside – at 9:00 AM, S&P 500 futures were up by +10.50; Dow by +109; and NASDAQ by +29.25

Directional Bias Before Open

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

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

Monthly
  • Under Pressure
  • October 2018 closed sharply lower; broke below previous four months’ lows; only third down month since October 2016; November was a harami spinning top near the lower end of October
  • Uptrend resumption since Feb 08, 2016 after a pull back of -15.2% – continues; higher highs and higher lows
Weekly:
  • The week ending on March 15 was a large Bullish Engulfing candle that followed the Bearish Engulfing candle of week before; almost no lower shadow and small upper shadow
    • Stochastics (9,1, 3) and RSI (14) turned up – %K crossed above %D from just below 75; RSI is again crossing above a downtrend line that it broke above once
    • The index is breaking above the 78.6% Fibonacci retracement of the decline from the high in early October 2018
  • Last week was up +79.41 or +2.9% and ATR is 83.12
  • Last week’s pivot point=2800.27, R1=2852.94, R2=2883.39; S1=2769.82, S2=217.15; R1 pivot level was breached
  • An up week; fourth in last five weeks and eight in last ten weeks
  • Last swing low, 2532.69, was the low on February 5, 2018 and breached in December 2018
  • Above 10-week EMA and 39-week SMA; above 89-week SMA
  • Uptrend
Daily
  • A green candle with almost no lower shadow and small upper shadow;
    • %K is above %D and near 90
    • Stochastic (70, 1, 3) Pop since February 11
    • RSI-9 is above 65; SMA8 of RSI-9 is trending down since February 27
    • The sequence of lower highs and lower lows since October 3, 2018 is broken
  • Above 20-day EMA, 50-day EMA, 100-DAY SMA and 200-day SMA
  • Uptrend
2-Hour (e-mini future)
  • Trending up from a low of 2726.50 at 10:00 AM on March 8; broke above the downtrend line from early March high; higher highs and higher lows since March 8; moving essentially sideways since12:00 PM on Wednesday
    • The Flag-Pennant, breakout January 30, the 61.8% extension target near 2815.00 is achieved and the 100% extension target is near 2906.00
  • RSI-9 is above 50 since March 8; above 75
  • %D above 85 but making a potential Bearish Divergence
  • Above 20-bar EMA, which is above EMA10 of EMA50
  • Bias: Up
30-Minute (e-mini future)
  • Trending up since  March 8
  • RSI-9 is moving between 40 and 65 and above; in danger of making Bearish Divergence
  • %D declining since 5:00 AM; Bearish Divergence in the making
  • At/above 20-bar EMA, which is above EMA10 of EMA50
  • Bias: Up
15-Minute (e-mini future)
  • Bollinger Band (20, 2.0) is moving up since 4:15 AM
  • The Bollinger Band narrowed from 9:30 PM to 4:15 AM; expanding since with price first walking up the upper band and the retracing t the middle band
  • Stochastic (9, 1, 3): %K crossed below %D from above 90 at 6:45 after %D made a Bearish Divergence
  • Bias: Up

Previous Session

Major U.S. indices closed higher on Monday, March 18 in mostly lower volume. Russell 2000 traded in higher volume. Indices closed mostly near the high for the day. The market rose in the early session and then declined before resuming the up move by mid-day.

From Briefing.com:

The S&P 500 gained 0.4% on Monday in a session led by the cyclical sectors. Some follow-through buying interest amid a lack of “new” catalysts helped the market advance in front of the Fed’s policy meeting this week.

The Dow Jones Industrial Average gained 0.3%, the Nasdaq Composite gained 0.3%, and the Russell 2000 gained 0.7%.

The S&P 500 energy (+1.4%), consumer discretionary (+1.1%), financials (+1.0%), and industrial (+0.9%) sectors outperformed the broader market. Conversely, the communication services (-0.8%), real estate (-0.5%), and utilities (-0.4%) sectors underperformed.
From a macro perspective, the market appeared uninterested by the latest developments pertaining to U.S.-China trade, Brexit, or slowing growth.

[…]

U.S. Treasuries closed near their unchanged marks. The 2-yr yield and the 10-yr yield increased one basis point each to 2.45% and 2.60%, respectively. The U.S. Dollar Index declined 0.1% to 96.49. WTI crude rose 1.4% to $59.30/bbl, supported by news that OPEC canceled its April meeting and will let its current production cuts run until at least June.

  • S&P 500 Sectors
Sector Daily Trend (Visual) Relative Strength (Last Month – February) Relative Strength (March) %K vs. %D (March)
Consumer Discretionary Down SPY (Cross-Under) SPY Above
Consumer Staples Down SPY SPY Above
Energy Down XLE XLE Above
Materials Down SPY SPY Above
Industrials Down XLI SPY (Cross-Under) Above
Finance Down SPY (Cross-Under) XLF (Cross-Over) Above
Technology Down XLK (Cross-Over) XLK Above
Utility Under Pressure SPY XLU (Cross-Over) Above
Heath Care Down SPY SPY Above
Real Estate Down SPY (Cross-Under) SPY Below
Telecom Down XLT SPY (Cross-Under) Above

 

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