Morning Notes – Thursday March 28, 2019

Directional Bias For The Day:

• S&P Futures are little changed; moving up since 9:00 PM after making a low of 2795.00
• Odds are for a sideways day with elevated volatility  – watch for break above 2814.50 and break below 2805.25 for clarity
• Key economic data due:
  • Final GDP (2.2% vs. 2.4% est.; prev. 2.6%) at 8:30 AM
  • Final GDP Price Index (1.7% vs. 1.8% est.; prev. 1.8%) at 8:30 AM
  • Unemployment Claims (211K vs. 222K est.; prev. 216K ) at 8:30 AM
  • Pending Home Sales ( est. 0.1% prev. 4.6%) at 10:00 AM

Markets Around The World

• Markets in the East closed mixed – Shanghai, Tokyo and Seoul were down, Hong Kong, Sydney, Mumbai and Singapore were up
•  European markets are mostly up – Spain and Italy are down
• Currencies:
  

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

• Commodities:
  

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

• Bonds
  • 10-yrs yield is at 2.377%, up from March 27 close of 2.374%;
  • 30-years is at 2.820%, down from 2.821%
  • 2-years yield is at 2.222%, up from 2.206%
  • The 10-Year-&-2-Year spread is at 0.157, down from 0.168

Key Levels:

• Critical support levels for S&P 500 are 2802.50, 2795.23 and 2787.72
• Crtical resistance levels for S&P 500 are 2811.41, 2822.73 and 2825.56
• Key levels for eMini futures: break above 2814.50, the high of 5:00 AM and break below 2805.25, the low of 7:30 AM

Pre-Open

• On Wednesday, at 4:00 PM, S&P future (June contract) closed at 2810.00 and the index closed at 2805.37 – a spread of about +4.75 points; futures closed at 2810.50 for the day; the fair value is -0.50
• Pre-NYSE session open, futures are little changed to higher – at 8:45 AM, S&P 500 futures were up by +0.25; Dow by +15 and NASDAQ by +1.75

Directional Bias Before Open

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

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

Previous Session

Major U.S. indices closed mostly lower on Wednesday, March 27 in higher volume. Dow Jones Transportation Average closed up and Dow Jones Industrial Average traded in lower volume. Most indices made a bearish engulfing pattern with though engulfed the small green doji-type candle of Tuesday was within the large red real body of Friday.

From Briefing.com:

The S&P 500 lost 0.5% on Wednesday, although it had been down as much as 1.1% on recurring concerns about slowing growth and a resilient U.S. Treasury market. The broader market spent the bulk of afternoon action in a steady rebound as Treasuries cooled off, but missing leadership from tech stocks limited the scope of the rebound attempt.

The Dow Jones Industrial Average lost 0.1%, the Nasdaq Composite lost 0.6%, and the Russell 2000 lost 0.4%.

Ten of the 11 S&P 500 sectors finished lower, led by health care (-0.8%) and energy (-0.7%). The industrial sector (+0.1%) was the lone group to finish higher.

[…]

Wednesday’s reminders about slowing growth came from overseas:
• European Central Bank President Mario Draghi indicated the ECB may maintain its highly accommodative policy for an even longer period
• 2019 growth expectations for Italy were cut to zero by a confederation of industrial employers
• Switzerland’s KOF Institute lowered its expectations for 2019 Swiss GDP growth to 1.0% from 1.6%
• The Reserve Bank of New Zealand issued a dovish statement, indicating the next move in rates is likely to be a cut

The 2-yr yield declined five basis points to 2.21%, and the 10-yr yield declined four basis points to 2.37%. The U.S. Dollar Index increased 0.2% to 96.89.

[…]

• The weekly MBA Mortgage Applications Index jumped 8.9% following a 1.6% increase in the prior week.
• The trade deficit narrowed to $51.1 bln in January (Briefing.com consensus -$57.5 bln) from a revised $59.9 bln (from $59.8 bln) in December. On a year-over-year basis, the goods and services deficit decreased 3.7% from the level observed in January 2018.
• The current account deficit for the fourth quarter totaled $134.4 billion (Briefing.com consensus -$126.6 billion). The third quarter deficit was revised to $126.6 billion from $124.8 billion.

• S&P 500 Sectors