Market Remarks

Morning Notes – Wednesday March 25, 2020

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are lower and volatile; off the higher around 2500.00 reached in European session
  • The odds are for a sideways day with extreme volatility – watch for break below 2387.50 and break above 2498.00 for clarity
  • Key economic data due:
    • Durable Goods Orders ( 1.2% vs. -1.0% est.; prev. -0.2% ) at 8:30 AM
    • Core Durable Goods Orders (-0.6% vs. -0.4% est. ; prev. 0.8% ) at 8:30 AM
    • HPI ( est. .4%; prev. 0.6% ) at 9:00 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 2414.11, 2360.25 and 2344.44
  • Critical resistance levels for S&P 500 are 2449.71, 2466.97 and 2529.56
  • Key levels for eMini futures: break above 2498.00, the high of 5:30 AM and break below 2387.50, the low of 7:30 AM

Pre-Open

  • On Tuesday at 4:00 PM, S&P future (June 2020) closed at 2433.00 and the index closed at 2447.33 – a spread of about -14.25 points; futures closed at 2438.00 for the day; the fair value is -5.00
  • Pre-NYSE session open, futures are lower – at 8:30 AM, S&P 500 futures were down by -22.25; Dow by -16 and NASDAQ by -63.50

Markets Around The World

  • Markets in the East closed up
  • European markets are mostly higher – Germany and Italy are lower
  • Currencies:
    Up Down
    • EUR/USD
    • GBP/USD
    • USD/JPY
    • AUD/USD
    • NZD/USD
    • INR/USD
    • Dollar index
    • USD/CHF
    • USD/CAD
  • Commodities:
    Up Down
    • NatGas
    • Silver
    • Platinum
    • Palladium
    • Sugar
    • Crude Oil
    • Gold
    • Copper
    • Coffee
    • Cotton
    • Cocoa
  • Bond
    • 10-yrs yield is at 0.850%, up from March 24 close of 0.816%;
    • 30-years is at 1.405%, up from 1.369%
    • 2-years yield is at 0.359% up from 0.371%
    • The 10-Year-&-2-Year spread is at 0.491 up from 0.445
  • VIX
    • Is at 65.76 up +4.09 from March 24 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 large green candle that gapped up at the open; the gap was not closed; almost no upper and lower shadows
    • %K crossed above %D from around 10
    • RSI-9 turned up from below 30 to above 40; Bullish Divergence; 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)
  • Bouncing off the low of Sunday’s gap-down open; retracing since 6:00 AM;
    • Downtrend; lower lows and lower highs since mid-February; a move above 2499.00 will break the sequence; the high of European session was 2498.00
    • RSI-21 turning down from above 70
    • %K is below %D from above 80
  • Above 20-bar EMA, which is above EMA10 of EMA50
  • Bias: Down-Side
30-Minute (e-mini future)
  • Rising since 6:00 PM on Sunday; higher highs and higher lows but within a larger downtrend;
    • RSI-21 declined to 50 from above 65
    • %K is crossing above %D
  • Below 20-bar EMA but above EMA10 of EMA50
  • Bias: Side-Up
15-Minute (e-mini future)
  • Bollinger Band (20, 2.0) moving sideways to down since 7:30 PM
  • The Bollinger Band was relatively small for sometime during Asian session; enlarging since 1:45 AM; price walking down the lower band since 6:30 AM
  • Stochastic (9, 1, 3): %K is crossing above %D since 7:00 AM
  • Bias: Up-Side

Previous Session

Major U.S. indices closed sharply higher on Tuesday, March 24 in mixed volume. S&P 500 and NASDAQ Composite traded in lower volume.

U.S. indices gapped up at the open and then mostly stayed above the open. Dow Jones Industrial Average had fifth highest percentage gains, however, higher gains happened during 30’s depression.

From Briefing.com:

The S&P 500 surged 9.4% on Tuesday, as news that the elusive fiscal stimulus package was close to being agreed to in the Senate spurred a broad-based rebound. The Dow Jones Industrial Average climbed 11.4%, the Nasdaq Composite climbed 8.1%, and the Russell 2000 climbed 9.4%.

All 11 S&P 500 sectors posted strong gains, especially the energy (+16.3%), financials (+12.8%), and industrials (+12.8%) sectors. The consumer staples sector (+4.8%) was the lone sector to advance less than 5.0%.

[…]

U.S. Treasuries retreated for most of the day but did close off session lows. The 2-yr yield rose eight basis points to 0.37%, and the 10-yr yield rose five basis points to 0.82%. The U.S. Dollar Index declined 0.5% to 101.96. Gold futures rose 6.0% to $1659.80/ozt to extend its weekly advance following some positive-minded commentary out of Goldman Sachs.

 

[…]

• The key takeaway from the report is that it shows new home demand was strong in February, but that was before everything changed this month in the U.S. with the coronavirus situation, which is expected to severely weigh on home buying interest in the near term.

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