Morning Notes – Tuesday February 11, 2020

/ February 11, 2020

Directional Bias For The Day:

  • S&P Futures are higher;
  • The odds are for an up day; watch for break below 3355.25 for change of fortune
  • Key economic data due:
    • Fed Chair Powell’s Humphrey-Hawkins Testimony
    • JOLTS Job Openings ( est. 6.93M; prev 6.80 M) at 10;00 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 3351.96, 3334.29 and 3317.77
  • Critical resistance levels for S&P 500 are 3363.64, 3375.20 and 3398.13
  • Key levels for eMini futures: break above 3364.75, the high of 9:30 PM and break below 3355.25, the low of 4:00 AM

Pre-Open

  • On Monday, at 4:00 PM, S&P future (March 2020) closed at 3351.50 and the index closed at 3352.09 – a spread of about -0.50 points; futures closed at 3353.00 for the day; the fair value is -1.50
  • Pre-NYSE session open, futures are higher – at 9:00 AM, S&P 500 futures were up by +10.75; Dow by +117 and NASDAQ by +45.25

Markets Around The World

  • Markets in the East closed higher – Tokyo was closed;
  • European markets are higher
  • Currencies:
    Up Down
    • Dollar index
    • GBP/USD
    • USD/JPY
    • USD/CHF
    • AUD/USD
    • NZD/USD
    • EUR/USD
    • USD/CAD
    • INR/USD
  • Commodities:
    Up Down
    • Crude Oil
    • Copper
    • Platinum
    • Sugar
    • Cotton
    • Cocoa
    • NatGas
    • Gold
    • Silver
    • Palladium
    • Coffee
  • Bonds
    • 10-yrs yield is at 1.587%, up from February 10 close of 1.547%;
    • 30-years is at 2.047%, up from 2.020%
    • 2-years yield is at 1.411%, up from 1.403%
    • The 10-Year-&-2-Year spread is at 0.174 up from 0.144
  • VIX
    • Is at 14.69 down -0.35 from February 10 close; below 5-day SMA
    • Next high resistance is 21.46, the high of October 2, 2019; the low support is the low was 11.72 on December 26

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

Monthly
  • Uptrend
  • January 2020 was a red shooting star like candle with long upper shadow and almost no lower shadow
    • Stochastic %K turned below %D from above 90
    • RSI-9 is above a downtrend line from January 2018 high; turning down just above 70
    • At the upper band from near the middle band of the 120-month regression channel
  • Sequence of higher highs and higher lows since February 2016 was broken in December 2018 but has resumed since then
Weekly:
  • The week ending on February 7 was a large green candle with almost no lower shadow and small upper shadow; the three week pattern is like a morning star pattern, albeit in an uptrend
    • Bouncing off the 10-week EMA
    • Stochastic (9,1, 3): %K crossed above %D from near 50; Bearish Divergence
    • RSI (9) turning up after dipping below 60
  • Last week was up +102.19 or +3.2%; the 5-week ATR is 78.47
  • Last week’s pivot point=3303.78, R1=3371.89, R2=3416.08; S1=3259.59, S2=3191.48; R1/R2 pivot levels were breached
  • An up week following two down weeks; third in last five weeks and seventh in last ten weeks
  • Near all time highs; Last swing low, 2822.12, was the low on August 5, 2019; last swing high was 3027.98, made during the week of July 22, 2019
  • Above 10-week EMA; above 39-week SMA and 89-week SMA
  • Uptrend
Daily
  • A relatively large Bullish Engulfing candle with almost no upper and lower shadows
    • %K again crossed above %D above 90
    • RSI-9 is turned from above 60; made a double bottom, with lower second bottom, pattern in the last week of January; above 8-day SMA;
  • Above 20-day EMA, 50-day EMA, 100-day SMA and 200-day SMA;
  • Uptrend Under Pressure
2-Hour (e-mini future)
  • Moving up since 6:00 PM on Sunday after coming close to a support zone, which was earlier a resistance level, the upper bound of a horizontal trading area
    • RSI-21 is from near 30 on Sunday evening to above 70
    • %K is crisscrossing %D above 80
  • Above 20-bar EMA, which is above EMA10 of EMA50
  • Bias: Up
30-Minute (e-mini future)
  • Moving up since 10:00 AM on Monday
    • Broke above a down-sloping bullish flag on Monday; the pole height is 140 points and the break-away point is 3310.00; the 61.8% extension target is near 3390.00 and the 100% extension target is near 3450.00
    • RSI-21 is rising from below 40 on Sunday evening to above 60
    • %K is crisscrossing %D higher
  • Above 20-bar EMA, which is above EMA10 of EMA50
  • Bias: Up
15-Minute (e-mini future)
  • Bollinger Band (20, 2.0) is moving sideways to up since 0:30 AM
  • The Bollinger Band is relatively stable and narrow
  • Stochastic (9, 1, 3): %K is crisscrossing %D higher
  • Bias: Up-Side

Previous Session

Major U.S. indices closed higher on Monday, February 10 in mixed volume. Most indices made Bullish Engulfing candles with almost no upper and lower shadows. Only two S&P sectors – Energy and Materials – closed down.

From Briefing.com:

The stock market finished strong on Monday, with shares of mega-cap technology companies propelling the S&P 500 (+0.7%) and Nasdaq Composite (+1.1%) to new closing records. The Dow Jones Industrial Average (+0.6%) and Russell 2000 (+0.7%) performed in-line with the S&P 500.

[…]

In turn, the consumer discretionary (+1.3%) and information technology (+1.4%) sectors were among the sector leaders, as well as the defensive-oriented real estate sector (+1.2%). The energy sector (-0.8%) continued to underperform, as WTI crude ($49.57/bbl, -0.78, -1.6%) fell back below $50/bbl amid lingering concerns about end-demand due to the coronavirus.

[…]

U.S. Treasuries posted modest gains, pushing yields lower across the curve. The 2-yr yield declined one basis point to 1.38%, and the 10-yr yield declined three basis points to 1.55%. The U.S. Dollar Index increased 0.2% to 98.85.

Investors did not receive any notable economic data on Monday.

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