Morning Notes – Tuesday March 24, 2020

/ March 24, 2020

Directional Bias For The Day:

  • S&P Futures are higher and volatile;
  • The odds are for an up day – a bounce from oversold levels; extreme volatility – watch for break below 2301.25 for change of fortune
  • Key economic data due:
    • Flash Manufacturing PMI (est. 45.1; prev. 50.7) at 9:45 AM
    • Flash Services PMI ( est. 44.1; prev. 49.4) at 9:45 AM
    • Richmond Manufacturing Index ( est. -10; prev. -2) at 10:00 AM
    • New Home Sales (est. 750k; prev. 764K) at 10:00 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 2300.73, 2280.52 and 2256.88
  • Critical resistance levels for S&P 500 are 2356.30, 2404.30 and 2452.80
  • Key levels for eMini futures: break above 2385.25, the high of 8:00 AM on Monday and break below 2301.25, the low of 8:00 AM

Pre-Open

  • On Monday, at 4:00 PM, S&P future (June 2020) closed at 2216.75 and the index closed at 2237.40 – a spread of about -20.75 points; futures closed at 2220.50 for the day; the fair value is -3.75
  • Pre-NYSE session open, futures are higher – at 8:30 AM, S&P 500 futures were up by +85.50; Dow by +738 and NASDAQ by +287.00

Markets Around The World

  • Markets in the East closed up
  • European markets are higher
  • Currencies:
    Up Down
    • EUR/USD
    • GBP/USD
    • AUD/USD
    • NZD/USD
    • USD/CAD
    • Dollar index
    • USD/JPY
    • USD/CHF
    • INR/USD
  • Commodities:
    Up Down
    • Crude Oil
    • NatGas
    • Gold
    • Silver
    • Copper
    • Platinum
    • Palladium
    • Sugar
    • Coffee
    • Cotton
    • Cocoa
  • Bonds
    • 10-yrs yield is at 0.832%, up from March 23 close of 0.764%;
    • 30-years is at 1.413%, up from 1.344%
    • 2-years yield is at 0.325% up from 0.318%
    • The 10-Year-&-2-Year spread is at 0.512 up from 0.446
  • VIX
    • Is at 55.80 down -5.79 from March 23 close; below 5-day SMA;
    • Down from all time high of 85.47 on March 18

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 20 was a large red candle with small upper and lower shadows; broke December 2018 support and is at the congestion area – sideways to up trend – during the Q1 of 2017;
    • Stochastic (9,1, 3): %K is below %D; below 20
    • RSI (9) is nearing 15
  • Last week was down -406.10 or -15.0%; the 5-week ATR is 341.23
  • Last week’s pivot point=2382.81, R1=2485.09, R2=2665.27; S1=2202.63, S2=2100.25; S1/S2 pivot levels were breached
  • A down week; fourth in last five weeks and sixth 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 red candle with small upper shadow and the lower shadow almost equal to the real body
    • %K is crisscrossing %D around 10
    • RSI-9 turned down; just below 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; lower lows and lower highs since mid-February; gapped down at the open of the week but is bouncing up from those low levels – bounced up more than 200 point from the low of 2174.00 at one time on Monday before testing the lows again; higher from those lows
    • RSI-21 rising around 60 after Bullish Divergence
    • %K is crisscrossing %D higher; Bullish Divergence
  • Above 20-bar EMA but below EMA10 of EMA50
  • Bias: Down
30-Minute (e-mini future)
  • Downtrend but rising since 6:00 PM on Sunday; reached limit up during early European session for some time;
    • RSI-21 declined from 60 to near 55
    • %K crossed below  %D
  • Above 20-bar EMA, which is above EMA10 of EMA50
  • Bias: Down-Side
15-Minute (e-mini future)
  • Bollinger Band (20, 2.0) moved up since from 11:15 PM on Sunday
  • The Bollinger Band is relatively small but still large since 4:30 PM on Monday
  • Stochastic (9, 1, 3): %K is crossing above %D
  • Bias: Side-Up

Previous Session

Major U.S. indices closed lower on Monday, March 23 in mostly lower volume. NASDAQ Composite traded in higher volume.

Futures were high before the open but the indices opened up near the previous close.. Indices traded higher briefly in late morning but mostly traded in red. All S&P sectors were down.

From Briefing.com:

The S&P 500 fell 2.9% on Monday in another volatile session, as disappointment over the Senate’s inability to advance its stimulus bill outweighed the unprecedented stimulus measures announced by the Fed. The Dow Jones Industrial Average declined 3.0%, the Russell 2000 declined 1.1%, and the Nasdaq Composite declined just 0.3%.

Selling was mostly broad-based with ten of the 11 S&P 500 sectors finishing lower, particularly the energy (-6.7%) and financials (-6.1%) sectors. The exceptions were the S&P 500 consumer discretionary sector (+0.4%) and Philadelphia Semiconductor Index (+3.4%).

[…]

U.S. Treasuries finished higher amid the continued weakness in equities and the latest actions from the Fed. The 2-yr yield fell eight basis points to 0.29%, and the 10-yr yield fell 17 basis points to 0.76%. The U.S. Dollar Index declined 0.3% to 102.48. WTI crude rose 3.8%, or $0.86, to $23.49/bbl.

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