Market Remarks

Morning Notes – Tuesday March 10, 2020

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are higher; daily bias is down;
  • The odds are for an up day with elevated volatility; watch for break below 2817.75 for change of fortune
  • No key economic data due:

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 2790.20, 274448 and 2734.43
  • Critical resistance levels for S&P 500 are 2838.67, 2863.89 and 2901.54
  • Key levels for eMini futures: break above 2879.00, the high of 6:30 AM and break below 2717.75, the low of 8:30 AM

Pre-Open

  • On Monday, at 4:00 PM, S&P future (March 2020) closed at 2735.75 and the index closed at 2746.56 – a spread of about -10.75 points; futures closed at 2747.75 for the day; the fair value is -12.00
  • Pre-NYSE session open, futures are higher – at 9:00 AM, S&P 500 futures were up by +86.25; Dow by +750 and NASDAQ by +264.25

Markets Around The World

  • Markets in the East closed higher – Mumbai was closed for trading
  • European markets are higher
  • Currencies:
    Up Down
    • Dollar index
    • USD/JPY
    • USD/CHF
    • EUR/USD
    • GBP/USD
    • AUD/USD
    • NZD/USD
    • USD/CAD
    • INR/USD
  • Commodities:
    Up Down
    • Crude Oil
    • NatGas
    • Silver
    • Copper
    • Platinum
    • Sugar
    • Coffee
    • Cotton
    • Cocoa
    • Gold
    • Palladium
  • Bonds
    • 10-yrs yield is at 0.638%, up from March 9 close of 0.499%;
    • 30-years is at 1.129%, up from 0.937%
    • 2-years yield is at 0.423% up from 0.396%
    • The 10-Year-&-2-Year spread is at 0.201 up from 0.103
  • VIX
    • Is at 48.32 down -6.13 from March 9 close; above 5-day SMA;
    • At highest levels since December 2008; Next high resistance is 62.12, the high of March 9; the low support is 24.93, the low on March 3

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

Monthly
  • Uptrend under pressure
  • February 2020 was a large red spinning top candle; declined 8.4%;
    • Stochastic %K is below %D and near 30; %K Bearish Divergence
    • RSI-9 declined from above 75 to 50; Bearish Divergence
    • Declined from the upper band of the 120-month regression channel to middle of the band
  • Sequence of higher highs and higher lows since February 2016 was broken in December 2018 but has resumed since then; last higher low was 2222.12 made in August 2019
Weekly:
  • The week ending on March 6 was a doji harami candle with large upper and lower shadows;
    • Stochastic (9,1, 3): %K is below %D after potential Bearish Divergence; below 20 but turning up
    • RSI (9) is nearing 30 after Bearish Divergence; turning up
  • Last week was up +18.15 or +0.6%; the 5-week ATR is 194.28
  • Last week’s pivot point=3003.54, R1=3105.55, R2=3238.72; S1=2870.37, S2=2768.36; No pivot levels were breached
  • An up week following two down weeks; third in last five weeks and fifth in last ten weeks
  • All time high of 3393.52 was during the week of February 17; Last swing low, 2822.12, was the low on August 5, 2019; previous last swing high was 3027.98, made during the week of July 22, 2019
  • Below 10-week EMA and 39-week SMA, and 89-week SMA
  • In Correction
Daily
  • A large red candle with no upper shadow and very small lower shadow; big down gap
    • %K is below %D from near 50 on Friday; near 0
    • RSI-9 is below 20 after rising to 45; below 8-day SMA, which is turning up from near 25;
  • Below 20-day EMA, 50-day EMA, 100-day SMA and 200-day SMA;
  • In Correction
2-Hour (e-mini future)
  • Downtrend; moving up since 6:00 PM on March  from oversold conditions and after breaching the lows of June 2019;
    • RSI-21 rising from below 20 since 4:00 PM on March and after making Bullish Divergence; above 50
    • %K is crisscrossing %D around 80
  • Above 20-bar EMA, which is below EMA10 of EMA50
  • Bias: Down-Side
30-Minute (e-mini future)
  • Downtrend since February 19; moving up since 6:00 PM on Monday; sideways since 6:00 PM on Sunday within a large – 200 points range
    • RSI-21 is rising since 6:00 PM on Monday after making Bullish Divergence near 25; above 50
    • %K is crisscrossing %D
  • At/below EMA10 of EMA50, which is above 20-bar EMA
  • Bias: Down-Side
15-Minute (e-mini future)
  • Bollinger Band (20, 2.0) is moving up since 7:15 PM on Monday;
  • The Bollinger Band is large though it relatively narrowed for a short time from 11:45 PM to 6:00 AM
  • Stochastic (9, 1, 3): %K crossed above %D at 7:45 AM
  • Bias: Up

Previous Session

Major U.S. indices closed sharply lower on Monday, March 9 in mostly higher volume. Dow Jones Transportation Average traded in lower volume.

The indices gapped down sharply at the open and then made day’s low in first few minutes of trading before the trading was halted for 15 minutes due to decline greater than 7%. The indices recovered some of the losses by mid-day but then again tested the lows before closing slightly above the lows.

From Briefing.com:

The S&P 500 dropped 7.6%, oil prices tanked 25%, and Treasury yields continued to fall to unprecedented levels on Monday after Saudi Arabia initiated a price war and coronavirus cases accelerated.

The Dow Jones Industrial Average (-7.8%) and Nasdaq Composite (-7.3%) performed comparably to the benchmark index, while the Russell 2000 (-9.4%) underperformed.

[…]

The other ten S&P 500 sectors posted losses between 4.4% (consumer staples) and 10.9% (financials).

The financials space remained pressured by the sharp decline in Treasury yields, as investors continued to seek safety in bonds. The 2-yr yield fell 18 basis points to 0.32%, and the 10-yr yield fell 21 basis points to 0.50% after touching 0.34% at its low. The U.S. Dollar Index dropped 1.0% to 95.02.

Stocks were halted from trading for 15 minutes in the opening minutes of action after the S&P 500’s 7.0% decline triggered a circuit breaker.

[…]
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