Directional Bias For The Day:

• S&P Futures are sharply lower; resuming the downtrend since 7:30 AM; near the lows of October 2019
• The odds are for a down day with elevated volatility; watch for break above 2960.00 for change of fortune
• Key economic data due:
  • Core PCE Price Index ( 0.1% vs. 0.2% est.; prev. 0.2%) at 8:30 AM
  • Personal Spending ( 0.2% vs. 0.3% est.; prev. 0.4%) at 8:30 AM
  • Personal Income ( 0.6% vs. 0.3% est.; prev. 0.1% ) at 8:30 AM
  • Prelim Wholesale Inventories (-0.2% vs. 0,1% est.; prev. -0.2%) at 8:30 AM
  • Chicago PMI ( 49.0 vs. 46.1 est.; prev. 42.9) at 9:45 AM
  • Revised UoM Consumer Sentiment ( 101.0 vs. 100.7 est.; prev. 100.9) at 10:00 AM
  • Revised UoM Inflation Expectations ( 2.4%; prev. 2.5% ) at 10:00 AM

Directional Bias Before Open:

Key Levels:

• Critical support levels for S&P 500 are 3070.33, 3060.53 and 3050.72
• Critical resistance levels for S&P 500 are 3078.80, 3087.41 and 3094.97
• Key levels for eMini futures: break above 2953.75, the high of 7:30 AM and break below 2879.00, the low of 4:30 AM

Pre-Open

• On Thursday, at 4:00 PM, S&P future (March 2020) closed at 2973.75 and the index closed at 2978.76 – a spread of about -5.00 points; futures closed at 2957.00 for the day; the fair value is +16.75
• Pre-NYSE session open, futures are lower – at 9:15 AM, S&P 500 futures were down by -78.25; Dow by -571 and NASDAQ by -227.50

Markets Around The World

• Markets in the East closed sharply lower
• European markets are sharply lower
• Currencies:
  

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

• Commodities:
  

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

• Bonds
  • 10-yrs yield is at 1.193%, down from February 27 close of 1.299%;
  • 30-years is at 1.698%, down from 1.784%
  • 2-years yield is at 0.911% down from 1.153%
  • The 10-Year-&-2-Year spread is at 0.282 up from 0.146
• VIX
  • Is at 41.62 up +2.46 from February 25 close; above 5-day SMA;
  • At highest level since February 2018; Next high resistance is 50.30, the high of February 6, 2018; the low support is the upper high of the gap at 22.00, the low on February 24

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

Previous Session

Major U.S. indices closed sharply lower on Thursday, February 27 in volume higher than that on Wednesday. Indices gapped down at the open and then traded down closing near the lows.

From Briefing.com:

The stock market extended its recent sell-off by more than 4% on Thursday in a volatile session, as the widening spread of the coronavirus heightened pessimism among investors. The S&P 500 dropped as much as 3.5% shortly after the open, then cut its losses to 0.6% by midday, but ultimately closed at session lows with a 4.4% decline.

The Dow Jones Industrial Average (-4.4%), Nasdaq Composite (-4.6%), and Russell 2000 (-3.5%) experienced similar price action. Each of the major indices fell into correction territory, which is often defined as a decline of at least 10% from a recent high, and today’s drop sent the S&P 500 well below its 200-day moving average (3046.58) amid heavy selling into the close.

From a sector perspective, all 11 S&P 500 sectors fell between 3.3% (health care) and 5.6% (real estate). Other notable moves included WTI crude falling 3.0% to $47.24/bbl to extend its weekly decline to 12.1% and the CBOE Volatility Index surging 42.1% to 39.16 in a protection trade against further equity weakness.

[…]

At session’s end, the 2-yr yield declined five basis points to 1.10%, and the 10-yr yield declined one basis point to 1.30%. The U.S. Dollar Index fell 0.5% to 98.48.

[…]

• January durable goods orders declined 0.2% (Briefing.com consensus -1.6%). Excluding transportation, durable goods orders were up 0.9% (Briefing.com consensus +0.2%).
o The key takeaway from the report is that it showed a nice pickup in business spending in January, evidenced by the 1.1% increase in nondefense capital goods orders excluding aircraft. Still, concerns about a slowdown in spending will persist since the spread of the coronavirus, and responses to control its spread, has intensified in February.
• Initial claims for the week ending February 22 increased by 8,000 to 219,000 (Briefing.com consensus 212,000). Continuing claims for the week ending February 15 decreased by 9,000 to 1.724 million.
o The key takeaway from the report is that the four-week moving average of 209,750 for initial claims remains at an encouragingly low level in terms of the labor market outlook.
• The second estimate for Q4 GDP was unchanged at 2.1% (Briefing.com consensus 2.2%) while the GDP Price Deflator (Briefing.com consensus 1.4%) was revised down to 1.3% from 1.4%.
o The key takeaway from the report is that it is backward-looking and can be easily dismissed in light of the more current growth problems related to the coronavirus.
• Pending Home Sales rose 5.2% in January (Briefing.com consensus +2.0%). Today’s reading follows a revised 4.3 decline in December (from -4.9%).