Morning Notes – Monday April 20, 2020

/ April 20, 2020

Directional Bias For The Day:

  • S&P Futures are lower; fresh leg down since 12:00 AM;
  • The odds are for a down day with elevated volatility – watch for break above 2860.25 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-Down
  • 15-Min: Up-Side-Down
  • 6-Min: Side-Down

Key Levels:

  • Critical support levels for S&P 500 are 2830.88, 2806.51 and 2792.91
  • Critical resistance levels for S&P 500 are 2833.43, 2862.16 and 2879.22
  • Key levels for eMini futures: break above 2829.75, the high of 7:00 AM and break below 2808.50, the low of 7:45 AM

Pre-Open

  • On Friday at 4:00 PM, S&P future (June 2020) closed at 2864.50 and the index closed at 2874.56 – a spread of about -10.00 points; futures closed at 2870.00 for the day; the fair value is -5.50
  • Pre-NYSE session open, futures are lower – at 8:15 AM, S&P 500 futures were down by -55.75; Dow by -513 and NASDAQ by -87.50

Markets Around The World

  • Markets in the East closed mostly down – Shanghai and Mumbai closed up
  • European markets are lower
  • Currencies:
    Up Down
    • Dollar index
    • USD/JPY
    • USD/CHF
    • NZD/USD
    • USD/CAD
    • INR/USD
    • EUR/USD
    • GBP/USD
    • AUD/USD
  • Commodities:
    Up Down
    • Gold
    • Silver
    • Platinum
    • Palladium
    • Crude Oil
    • NatGas
    • Copper
    • Sugar
    • Coffee
    • Cotton
    • Cocoa
  • Bond
    • 10-yrs yield closed at 0.654%, up from April 16 close of 0.609%;
    • 30-years is at 1.276%, up from 1.210%
    • 2-years yield is at 0.202% down from 0.219%
    • The 10-Year-&-2-Year spread is at 0.452 up from 0.390
  • VIX
    • Is at 42.42 up +4.47 from April 17 close; above 5-day SMA;
    • Down from all time high of 85.47 on March 18
    • Risk-off

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 17 was a green candle with almost no upper shadow and lower shadow that was two-third of the real body;
    • Stochastic (9,1, 3): %K is above %D above 50
    • RSI (9) is moving higher; near 50
  • Last week was up +84.74 or +3.0%; the 5-week ATR is 311.50
  • Last week’s pivot point=2824.98, R1=2928.80, R2=2983.03; S1=2770.75, S2=2666.93; No pivot levels were breached
  • An up week; third in last five weeks and fifth 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
  • Above 10-week EMA; below 39-week SMA, and 89-week SMA
  • In Correction
Daily
  • A green candle that gapped up at the open; very small lower shadow and almost no upper shadow; at the resistance created by the down-gap of on March 9
    • forming an ABCD pattern; achieved 61.8% extension target near 2725.00; 100% extension target is near 2897.00
    • %K is above %D above 90
    • RSI-9 moving up in zig-zag manner; near 60; above 8-day RSI;
  • Above 20-day EMA and 50-day EMA; below 100-day SMA and 200-day SMA;
  • In Correction; uptrend since March 23
2-Hour (e-mini future)
  • Rising in steps since April 2; broke above resistance level of 2846.00 on Thursday but is again below it
    • broke above a 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 down to 40 from above 70
    • %K is below %D; near 30
  • Below 20-bar EMA; above EMA10 of EMA50
  • Bias: Up
30-Minute (e-mini future)
  • A descending triangle is emerging with price near the lower bound; declining since 7:00 PM on April 16
    • RSI-21 declined to near 40
    • %K is crisscrossing %D lower
  • Below 20-bar EMA, which is below EMA10 of EMA50
  • Bias: Side-Down
15-Minute (e-mini future)
  • Bollinger Band (20, 2.0) moving sideways to down since 10:45 PM on Thursday
  • The Bollinger Band was relatively narrow till 5:45 AM; expanding since with price walking down the lower band
    • Stochastic (9, 1, 3): %K is crisscrossing %D below 20
  • Bias: Side-Down

Previous Session

Major U.S. indices closed higher on Friday, April 17 in mixed volume. Dow Jones Industrial Average and S&P 500 traded in higher volume. NASDAQ Composite is the leader. It has broken above March 10 down gap resistance. S&P 500 is close to this resistance but others are odd it.

For the week, U.S. indices closed mixed. Russell 2000 and Dow Jones Transportation Average closed lower. The volume was mixed. DJIA and NASDAQ Composite traded in higher volume for the week. Asian markets were higher for the week. Most European market were down. Germany, Switzerland and STOXX 600 were up.

From Briefing.com:

The S&P 500 advanced 2.7% on Friday amid hopes for a COVID-19 treatment and optimism about reopening the economy. The Dow Jones Industrial Average (+3.0%) and Russell 2000 (+4.3%) outpaced the benchmark index, while the Nasdaq Composite (+1.4%) had a more modest performance.

[…]

All 11 S&P 500 sectors posted gains to end the week with relative strength found in the energy (+10.4%) and financials (+5.6%) sectors.
The information technology sector (+1.4%) underperformed today …

[…]

The 2-yr yield increased one basis point to 0.20%, and the 10-yr yield increased four basis points to 0.65%. The U.S. Dollar Index declined 0.2% to 99.78.

Friday’s economic data was limited to the Conference Board’s Leading Economic Index for March, which declined 6.7% (Briefing.com consensus -7.1%) following a revised 0.2% decline in February (from +0.1%).

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