Morning Notes – Friday March 22, 2019

Directional Bias For The Day:

• S&P Futures are lower; moving  down since 4:00 AM;
• Odds are for a down to sideways  day with elevated volatility  – watch for break above 2852.00 for change of fortune
• Key economic data due:
  • Existing Home Sales (est. 5.10M; prev. 4.94M) at 9:45 AM
• Risk-off sentiment due to weak economic data from Europe and China

Markets Around The World

• Markets in the East closed mostly up – Mumbai and Singapore were down
• European markets are lower
• Currencies:
  

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

• Commodities:
  

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

• Bonds
  • 10-yrs yield is at 2.471%, down from March 21 close of 2.537%;
  • 30-years is at 2.909%, down from 2.964%
  • 2-years yield is at 2.366%, down from 2.416%
  • The 10-Year-&-2-Year spread is at 0.105, down from 0.121

Key Levels:

• Critical support levels for S&P 500 are 2841.44, 22830.93 and 2817.38
• Critical resistance levels for S&P 500 are 2853.59, 2860.31 and 2874.02
• Key levels for eMini futures: break above 2852.00, the high of 7:30 AM and break below 2842.25, the low of 8:00 AM

Pre-Open

• On Thursday, at 4:00 PM, S&P future (June contract) closed at 2861.00 and the index closed at 2854.88 – a spread of about +6.00 points; futures closed at 2862.50 for the day; the fair value is -1.50
• Pre-NYSE session open, futures price action is to the downside – at 8:45 AM, S&P 500 futures were down by -14.50; Dow by -162 and NASDAQ by -33.75

Directional Bias Before Open

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

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

Previous Session

Major U.S. indices closed higher on Thursday, March 21 in mixed volume. Dow Jones Transportation Average, NASDAQ Composite and S&P 500 traded in lower volume. Dow Jones Industrial Average and Russell 2000 traded in higher volume. The major indices made bullish engulfing candlesticks and did not confirm the previously emerging three-day evening star pattern.

From Briefing.com:

The S&P 500 gained 1.1% on Thursday, bolstered by the notion of a dovish Fed and persistently low U.S. Treasury yields. Leadership from the S&P 500 information technology sector (+2.5%), driven by gains in Apple (AAPL 195.09, +6.93, +3.7%) and Micron (MU 43.99, +3.86, +9.6%), also helped carry buying momentum throughout the day. The S&P 500 closed at its highest level this year.

The Dow Jones Industrial Average gained 0.8%, the Nasdaq Composite gained 1.4%, and the Russell 2000 gained 1.3%.

Ten of the 11 S&P 500 sectors finished higher, led by information technology (+2.5%), real estate (+1.8%), and consumer discretionary (+1.3%). Conversely, the financial sector lost 0.3%, pressured by concerns that the recent compression in spreads will lead to weak net interest margins for lenders.

[…]

U.S. Treasuries closed roughly unchanged after declining noticeably following Wednesday’s FOMC policy decision. The 2-yr yield and the 10-yr yield remained at 2.40% and 2.54%, respectively, although the 10-yr yield kissed 2.50% at its best level in morning action. The U.S. Dollar Index rose 0.7% to 96.41, driven by the idea that the U.S. remains the best place to invest. WTI crude lost 0.4% to $59.95/bbl.

[…]

• Initial claims for the week ending March 16 decreased by 9,000 to 221,000 (Briefing.com consensus 223,000) while continuing claims for the week ending March 9 dropped by 27,000 to 1.750 million.
o The key takeaway from the report is that it covers the period in which the survey for the March employment situation report was conducted, so with the low level of initial claims, expectations will pick up that March nonfarm payrolls will be up by a solid amount.
• The Philadelphia Fed Index jumped to 13.7 in March (Briefing.com consensus 6.0) from -4.1 in February.
o The key takeaway from the report is that it was accented by a pickup in new orders and a moderation in price pressures, which is the type of combination that has convinced the Fed to be patient before making any policy rate changes.
• The Conference Board’s Leading Economic Index increased 0.2% in February, as expected, following an unchanged reading for January. This is the first increase in the index since September 2018, and it was supported by gains in all the financial components and consumer expectations for business conditions.
o The key takeaway from the report is that the strengths among the leading indicators have become much less widespread, with only six of the ten components making positive contributions.

• S&P 500 Sectors