Morning Notes – Monday April 13, 2020

/ April 13, 2020

Directional Bias For The Day:

  • S&P Futures are lower;
  • European markets are closed due to Easter Monday
  • The odds are for a sideways to an up day with elevated volatility – watch for break below 2752.25 for change of fortune
  • No key economic data due:

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 2762.36, 2729.52 and 2708.35
  • Critical resistance levels for S&P 500 are 2795.73, 2818.57 and 2825.60
  • Key levels for eMini futures: break above 2776.50, the high of 8:30 AM and break below 2734.50, the low of 1:30 AM

Pre-Open

  • On Thursday at 4:00 PM, S&P future (June 2020) closed at 2780.00 and the index closed at 2789.82 – a spread of about -9.75 points; futures closed at 2779.75 for the day; the fair value is +0.75
  • Pre-NYSE session open, futures are lower – at 8:45 AM, S&P 500 futures were down by -9.00; Dow by -82 and NASDAQ by -29.00

Markets Around The World

  • Markets in the East closed lower – Hong Kong and Sydney are closed
  • European markets are closed for Easter Monday
  • Currencies:
    Up Down
    • Dollar index
    • GBP/USD
    • USD/CHF
    • AUD/USD
    • NZD/USD
    • USD/CAD
    • INR/USD
    • EUR/USD
    • USD/JPY
  • Commodities:
    Up Down
    • Crude Oil
    • NatGas
    • Copper
    • Palladium
    • Coffee
    • Gold
    • Silver
    • Platinum
    • Sugar
    • Cocoa
    • Cotton
  • Bond
    • 10-yrs yield is at 0.752%, up from April 9 close of 0.729%;
    • 30-years is at 1.381%, up from 1.354%
    • 2-years yield is at 0.219% down from 0.220%
    • The 10-Year-&-2-Year spread is at 0.528 up from 0.509
  • VIX
    • Is at 42.99 up +1.31 from April 9 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
  • March 2020 was a large red top candle with large upper and lower shadows; index declined 12.5%;
    • Stochastic %K is below %D and near 30; %K Bearish Divergence
    • RSI-9 declined from above 75 to near 30; Bearish Divergence
    • Broke below the lower band of the 120-month regression channel to middle of the band; only third time since 2009 but first close below the lower bound
  • Sequence of higher highs and higher lows broken
Weekly:
  • The week ending on April 10 was a large green candle that opened higher for the week almost no lower shadow and small upper shadows
    • Stochastic (9,1, 3): %K is above %D near40
    • RSI (9) is moving higher; near 45
  • Last week was up +301.17 or +12.1%; the 5-week ATR is 378.60
  • Last week’s pivot point=2727.65, R1=2880.74, R2=2971.65; S1=2636.74, S2=2483.65; R1/R2/R3 pivot levels were breached
  • An up week; second in last five weeks and fourth in last ten weeks
  • All time high of 3393.52, the last swing high, was during the week of February 17; broke below the low of the week of December 24, 2018; support near 2193.81, the high during the week of August 15, 2016; sequence of higher highs and higher lows broken
  • Below 10-week EMA and 39-week SMA, and 89-week SMA
  • In Correction
Daily
  • A relatively small green spinning top candle that gapped up at the open but did not close the gap completely;
    • forming an ABCD pattern; achieved 61.8% extension target near 2725.00; 100% extension target is near 2897.00
    • %K is above %D but turning down; above 80
    • RSI-9 moving up in zig-zag manner; above 60; above 8-day RSI;
  • Above 20-day EMA; at/below 50-day EMA; below 100-day SMA and 200-day SMA;
  • In Correction
2-Hour (e-mini future)
  • Rising in steps since April 2;
    • the 61.8% extension target near 2750 of the previously broken horizontal channel was achieved; 100% extension target is near 2825.00
    • also broke above a bigger horizontal channel – from March 11 to April 6 between 2650.00 and 2174.00; the 61.8% extension target is near 2944.00 and 100% extension target is near 3126.00
    • Uptrend – high highs & higher lows – since 10:00 AM on March 23
    • RSI-21 just below 60; moving between 40 and 65 since 10:00 AM on April 7; Bearish Divergence on April 8 and April 9;
    • %K is above %D; near 40
  • At/above 20-bar EMA, which is above EMA10 of EMA50
  • Bias: Up
30-Minute (e-mini future)
  • Moving sideways since 6:30 PM on Sunday
    • Retraced back to the upper bound of a horizontal channel between 2750.00 and 2620.75 that was broken to the upside on Thursday; 61.8% extension target is near 2830.00 and 100% extension target is near 2880.00
    • RSI-21 moving between 40 and 65 since April 1
    • %K is crisscrossing %D higher
  • Above 20-bar EMA, which is at/above EMA10 of EMA50
  • Bias: Up-Side
15-Minute (e-mini future)
  • Bollinger Band (20, 2.0) moving sideways to up since 11:00 PM on Sunday
  • The Bollinger Band was relatively narrow till 6:30 AM; expanding since with price walking up the upper band
  • Stochastic (9, 1, 3): %K is crisscrossing %D
  • Bias: Up-Side

Previous Session

Major U.S. indices closed higher on Thursday, April 9 in higher volume. The markets were closed on Good Friday, April 10. All S&P sectors except Energy closed higher.

For the shortened week, major U.S. indices closed higher in mostly lower volume. Global exchanges also closed higher for the week. All S&P sectors closed up.

From Briefing.com:

The stock market climbed to end the holiday-shortened week, but the Thursday affair saw some intraday volatility. The S&P 500 gained 1.5%, extending this week’s advance to 12.1% while the Nasdaq (+0.8%) underperformed but still gained 10.6% for the week.

[…]

Equities backpedaled from their highs in the afternoon, but ten out of eleven sectors were able to finish in the green. The gains were paced by groups like financials (+5.2%), real estate (+5.2%), and utilities (+4.8%).

[…]

Crude oil ended the day lower by $2.30, or 9.1%, at $22.87/bbl.
Treasuries finished near their highs, sending the 10-yr yield lower by four basis points to 0.73%.
The U.S. Dollar Index fell 0.6% to 99.50, widening this week’s loss to 1.0%.

[…]

• It was another dismal initial claims report, with 6.606 million jobless claims filed for the week ending April 4 (Briefing.com consensus 5.000 million), bringing the three-week total to 16,780,000 after revisions. Continuing claims for the week ending March 28 hit a record high 7.455 million
o The key takeaway from the jobless claims data is that the number of filings is simply astounding and a true sign of the vast impact of the sudden economic stop. Unfortunately, it likely still doesn’t capture the fullness of the impact as it’s reasonable to assume that the system for filing claims is overwhelmed and not facilitating every effort to file for jobless benefits
• The preliminary reading for the University of Michigan’s Consumer Sentiment Index for April plummeted to 71.0 (Briefing.com consensus 79.3) from 89.1 in March. This is the largest monthly decline on record
o The key takeaway from the report is that the more modest decline in the Expectations Index captures a feeling that the impact of the COVID-19 cases and death rates could soon peak, allowing for a restart of the economy
• The Producer Price Index for final demand declined 0.2% m/m in March (Briefing.com consensus -0.4%). Core PPI was up 0.2% (Briefing.com consensus -0.1%)
o The key takeaway from the report is that it doesn’t fully reflect the impact of the COVID-19 shutdown measures as the pricing date for the survey was March 10
• Wholesale inventories decreased by 0.7% in February

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