Morning Notes – Wednesday February 19, 2020

/ February 19, 2020

Directional Bias For The Day:

  • S&P Futures are higher;
  • The odds are for a sideways to an up day; watch for break below 3392.50 and break below 3372.25 for clarity
  • Key economic data due:
    • Building Permits (1.55M vs. 1.45M est.; prev. 1.42M) at 8:30 AM
    • Core PPI (0.5% vs. 0.2% est.; prev. 0.1%) at 8:30 AM
    • PPI (0.5% vs. 0.1% est.; prev. 0.1%) at 8:30 AM
    • Housing Starts ( 1.57M vs. 1.40M est.; prev. 1.63M) at 8:30 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 3355.70, 3334.29 and 3317.77
  • Critical resistance levels for S&P 500 are 3379.95, 3385.09 and 3397.73
  • Key levels for eMini futures: break above 3382.50, the high of 11:00 PM and break below 3372.25, the low of 8:00 PM

Pre-Open

  • On Tuesday, at 4:00 PM, S&P future (March 2020) closed at 3370.00 and the index closed at 3370.29 – a spread of about -0.25 points; futures closed at 3369.25 for the day; the fair value is +0.75
  • Pre-NYSE session open, futures are higher – at 9:00 AM, S&P 500 futures were up by +11.00; Dow by +88 and NASDAQ by +49.00

Markets Around The World

  • Markets in the East closed mostly higher – Shanghai was down;
  • European markets are higher
  • Currencies:
    Up Down
    • Dollar index
    • USD/JPY
    • USD/CHF
    • NZD/USD
    • EUR/USD
    • GBP/USD
    • AUD/USD
    • USD/CAD
    • INR/USD
  • Commodities:
    Up Down
    • Crude Oil
    • Gold
      Silver
    • Platinum
    • Palladium
    • Sugar
    • Cotton
    • NatGas
    • Copper
    • Coffee
    • Cocoa
  • Bonds
    • 10-yrs yield closed at 1.571%, down from February 14 close of 1.588%;
    • 30-years is at 2.018%, down from 2.043%
    • 2-years yield is at 1.407%, down from 1.424%
    • The 10-Year-&-2-Year spread is at 0.164 unchanged
  • VIX
    • Is at 14.23 down -0.60 from February 18 close; above 5-day SMA
    • Next high resistance is 19.99, the high of January 31; the low support is the low of 13.38 on February 14

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 14 was a large green candle with almost no lower shadow and small upper shadow following another large green candle which completed the three week morning star pattern, albeit in an uptrend
    • Stochastic (9,1, 3): %K is above %D; above 90
    • RSI (9) is moving up after dipping below 60
  • Last week was up +52.45 or +1.6%; the 5-week ATR is 78.26
  • Last week’s pivot point=3361.01, R1=3404.24, R2=3428.33; S1=3336.92, S2=3293.69; R1 pivot level was breached
  • Second consecutive up week; 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 small doji like
    • %K is below %D; potential Bearish Divergence
    • RSI-9 is turning from above 60; below 8-day SMA;
  • Above 20-day EMA, 50-day EMA, 100-day SMA and 200-day SMA;
  • Uptrend
2-Hour (e-mini future)
  • Moving up since 12:00 PM on Tuesday towards the upper bond of a horizontal channel after falling to its lower bound at the week’s open
    • RSI-21 is from near 30 to near 60 after making Bullish Divergence
    • %K is crisscrossing %D above 80
  • Above 20-bar EMA, which is above EMA10 of EMA50
  • Bias: Side
30-Minute (e-mini future)
  • Moving mostly sideways since 10:00 PM on February 5
    • RSI-21 is moving between 40 and 65 since early February; rising from near 40 to above 50
    • %K is above %D
  • At/above 20-bar EMA, which is above EMA10 of EMA50
  • Bias: Side
15-Minute (e-mini future)
  • Bollinger Band (20, 2.0) is moving up to sideways since 2:00 PM on Tuesday
  • 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 mixed on Tuesday, February 18 in mixed volume. NASDAQ Composite and Dow Jones Transportation Average closed higher. S&P 500 and Russell 200 traded in lower volume. Most indices made doji like indecisive candles. Only two S&P sectors – Utilities and Real Estate – closed up.

From Briefing.com:

The S&P 500 declined as much as 0.7% on Tuesday after Apple (AAPL 319.00, -5.95, -1.8%) provided a revenue warning due to the coronavirus. The market resiliently cut its losses during the afternoon, though, leaving the S&P 500 down 0.3% for the session.

The Nasdaq Composite (+0.02%) eked out a closing record, while the Dow Jones Industrial Average (-0.6%) and Russell 2000 (-0.2%) still finished lower.

[…]

The 2-yr yield declined two basis points to 1.40%, and the 10-yr yield declined three basis points to 1.56%. The U.S. Dollar Index rose 0.4% to 99.43. WTI crude inched up 0.1% (+$0.05) to $52.10/bbl, recouping its intraday losses.

[…]

• The Empire State Manufacturing Survey for February increased to 12.9 (Briefing.com consensus 6.3) from the prior month’s reading of 4.8.
• The NAHB Housing Market Index for February declined to 74 (Briefing.com consensus 75) from 75 in January.

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