Market Remarks

Morning Notes – Tuesday March 17, 2020

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are higher; but down from early European sessions
  • The odds are for an up day following a historic down previous day; extreme volatility;
  • Key economic data due:
    • Retail Sales ( -0.5% vs. 0.2% est.; prev. 0.6%) at 8:30 AM
    • Core Retail Sales ( -0.4% vs. 0.1% est.; prev. 0.6%) at 8:30 AM
    • Industrial Production ( 0.6% vs. est. 0.4%; prev. -0.3%) at 9:15 AM
    • Capacity Utilization Rate (77.0% vs. est. 77.1%; prev. 76.8%) at 9:15 AM
    • Business Inventories (est. -0.1%; prev. 0.1%) at 10:00 AM
    • JOLTS Jobs Openings ( est. 6.40M; prev. 6.42M) at 10:00 AM
    • NAHB Housing Market Index (est. 74; prev. 74) at 10:00 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 2397.94, 2380.94 and 2346.58
  • Critical resistance levels for S&P 500 are 2455.44, 2503.37 and 2562.98
  • Key levels for eMini futures: break above 2493.75, the high of 7:00 AM and break below 2409.50, the low of 8:00 AM

Pre-Open

  • On Monday, at 4:00 PM, S&P future (March 2020) closed at 2387.00 and the index closed at 2386.13 – a spread of about +0.75 points; futures closed at 2405.25 for the day; the fair value is -22.25
  • Pre-NYSE session open, futures are higher – at 8:30 AM, S&P 500 futures were up by +24.00; Dow by +223 and NASDAQ by +104.50

Markets Around The World

  • Markets in the East closed mixed – Shanghai, Mumbai, Seoul and Singapore closed down; Hong Kong, Tokyo and Sydney closed up
  • European markets are mostly lower – Spain is up
  • Currencies:
    Up Down
    • Dollar index
    • USD/JPY
    • USD/CHF
    • USD/CAD
    • INR/USD
    • EUR/USD
    • GBP/USD
    • AUD/USD
    • NZD/USD
  • Commodities:
    Up Down
    • Crude Oil
    • Platinum
    • Cotton
    • NatGas
    • Gold
    • Silver
    • Copper
    • Palladium
    • Sugar
    • Coffee
    • Cocoa
  • Bonds
    • 10-yrs yield closed at 0.728%, down from March 13 close of 0.951%;
    • 30-years is at 1.334%, down from 1.552%
    • 2-years yield is at 0.362% down from 0.502%
    • The 10-Year-&-2-Year spread is at 0.366 down from 0.449
  • VIX
    • Is at 81.03 down -1.66 from March 16 close; above 5-day SMA;
    • At highest levels ever

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 13 was a large red candle with large lower shadow and almost no upper shadow;
    • Stochastic (9,1, 3): %K is crossing above %D; near/below 20
    • RSI (9) is nearing 20
  • Last week was down -261.35 or -8.8%; the 5-week ATR is 268.60
  • Last week’s pivot point=2690.82, R1=2902.79, R2=3094.55; S1=2499.06, S2=2287.09; S1/S2/S3 pivot levels were breached
  • A down week; 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 that opened down and then mostly declined for the day and closed near the lows;
    • broken below recent and June 2019 support; nearing December 20018 support
    • Next support is at 2346.50, the 61.8% Fibonacci retracement of the rally from February 2016 to February 2020, which is also the low of 2018; also 38.2% retracement of rally from March-2009
    • %K is crossing below %D;
    • RSI-9 has turned down near 30; below 8-day RSI
  • Below 20-day EMA, 50-day EMA, 100-day SMA and 200-day SMA;
  • In Correction
2-Hour (e-mini future)
  • Downtrend; limit up during Asian session and then early European sessions; fallen near NYSE close again; mostly sideways move since 6:00 PM within a very large range;
    • RSI-21 near 40
    • %K is below %D
  • Below 20-bar EMA, which is below EMA10 of EMA50
  • Bias: Down
30-Minute (e-mini future)
  • Downtrend; Sideways move within a very large range
    • RSI-21 is between 40 and 30
    • %K is below %D
  • Below, 20-bar EMA, which is below EMA10 of EMA50
  • Bias: Down-Side
15-Minute (e-mini future)
  • Bollinger Band (20, 2.0) is moving sideways to down since 9:30 AM on Monday;
  • The Bollinger Band is large
  • Stochastic (9, 1, 3): %K is below %D
  • Bias: Down-Side

Previous Session

Major U.S. indices closed sharply lower on Monday, March 16 in mixed volume. Dow Jones Transportation Average and Russell 2000 traded in higher volume.

The indices opened with limit down as the 7% decline-trigger stopped trading. The indices declined the most since October 1987 and Dow Jones Industrial Average had a second largest decline in percent terms ever,

From Briefing.com:

There was a crisis of confidence in the stock market today, which led to the worst day of losses since the crash of 1987. The Dow Jones Industrial Average declined 12.9%, the S&P 500 fell 12.0%; the Nasdaq Composite dropped 12.3%; and the Russell 2000 plunged 14.3%.

[…]

Specifically, the target range for the fed funds rate was cut by 100 basis points to 0.00% to 0.25%, the discount rate was cut by 150 basis points to 0.25%, a $700 billion quantitative easing program is being implemented, there was coordinated central bank action to enhance liquidity via standing U.S. dollar liquidity swap line arrangements, and bank reserve requirement ratios were reduced to 0.00%, effective March 26.

[…]

The major indices all closed at, or near, their lows for the day, pressured by double-digit percentage losses in ten of the 11 sectors. The lone exception was the consumer staples sector (-7.0%); otherwise, losses ranged from 10.0% (health care) to 16.6% (real estate) in an historic day of trading. All 30 Dow components ended lower, with more than half suffering double-digit percentage losses. Boeing (BA 129.61, -40.59, -23.9%) was the biggest laggard.

[…]

• The New York Fed’s Empire State Manufacturing Survey fell to -21.5 in March (Briefing.com consensus 4.7) from 12.9 in February. The dividing line between expansion and contraction is 0.0.

Exit mobile version