Morning Notes – Tuesday April 21, 2020

/ April 21, 2020

Directional Bias For The Day:

  • S&P Futures are lower; fresh leg down since 3:00 AM;
  • The odds are for a down day with elevated volatility – watch for break above 2778.75 for change of fortune
  • Key economic data due:
    • Existing Home Sales ( 5.27M est.; prev. 5.77M) at 10:00 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 2761.54, 2731.94 and 2721.17
  • Critical resistance levels for S&P 500 are 2775.13, 2805.87 and 2822.06
  • Key levels for eMini futures: break above 2862.75, the high of 8:00 AM and break below 2746.00, the low of 8:00 PM on April 15

Pre-Open

  • On Monday at 4:00 PM, S&P future (June 2020) closed at 2813.25 and the index closed at 2823.16 – a spread of about -10.00 points; futures closed at 2806.50 for the day; the fair value is +7.75
  • Pre-NYSE session open, futures are lower – at 8:30 AM, S&P 500 futures were down by -51.75; Dow by -550 and NASDAQ by -79.25

Markets Around The World

  • Markets in the East closed down
  • European markets are lower
  • Currencies:
    Up Down
    • Dollar index
    • USD/CHF
    • USD/CAD
    • INR/USD
    • EUR/USD
    • GBP/USD
    • USD/JPY
    • AUD/USD
    • NZD/USD
  • Commodities:
    Up Down
    • Crude Oil (unch.)
    • NatGas
    • Gold
    • Silver
    • Copper
    • Platinum
    • Palladium
    • Sugar
    • Coffee
    • Cotton
    • Cocoa
  • Bond
    • 10-yrs yield is at 0.550%, down from April 20 close of 0.626%;
    • 30-years is at 1.134%, down from 1.237%
    • 2-years yield is at 0.193% down from 0.195%
    • The 10-Year-&-2-Year spread is at 0.357 down from 0.431
  • VIX
    • Is at 47.09 up +3.26 from April 20 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 red candle that opened lower with almost no lower shadow and small upper shadow; turning down from the resistance created by the down-gap of on March 9
    • forming an ABCD pattern (A on March 23, B on March31 and C on April 2); achieved 61.8% extension target near 2725.00; 100% extension target is near 2897.00
    • %K is below %D; potential Bearish Divergence
    • 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 April 16 but is now below it; retraced back to an uptrend line from April 2
    • 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 below 30 in zig-zag move from above 70
    • %K is crisscrossing %D below 20
  • Below 20-bar EMA; below EMA10 of EMA50
  • Bias: Up-Side
30-Minute (e-mini future)
  • Broke below a descending triangle; approaching 100% extension target near 2758.00; 161.8% extension target is near 2720.00
    • RSI-21 declined to near 30
    • %K is crisscrossing %D lower
  • Below 20-bar EMA, which is below EMA10 of EMA50
  • Bias: Down
15-Minute (e-mini future)
  • Bollinger Band (20, 2.0) moving down since 4:00 AM on Monday
  • The Bollinger Band was relatively narrow from 3:00 AM to 5:15 AM; expanding since with price walking down the lower band
    • Stochastic (9, 1, 3): %K is crisscrossing %D near 20
  • Bias: Down

Previous Session

Major U.S. indices closed lower on Monday, April 20 in lower volume. Indices opened lower but then tried to rise, which faltered by mid-day and they closed near the lows for the day. Russell 2000 made doji with almost equal sized upper and lower shadows and small real body. Other had almost no lower shadow and small upper shadow. All S&P sectors closed down though – Telecom closed higher for the day but Communication Services did not.

From Briefing.com:

The S&P 500 declined 1.8% on Monday, although that was relatively modest given the implosion in the oil market where the expiring May contract for WTI crude closed negative for the first time ever. The Dow Jones Industrial Average declined 2.4%, the Nasdaq Composite declined 1.0%, and the Russell 2000 declined 1.3%.

Specifically, WTI crude futures for May delivery collapsed 306%, or $55.83, to -$37.63/bbl ahead of tomorrow’s expiration …

[…]

All 11 S&P 500 sectors closed in negative territory, near session lows, with the energy (-3.2%), real estate (-3.7%), and utilities (-3.9%) sectors leading the retreat. The health care (-0.8%) and communication services (-0.9%) sectors declined less than 1%.

[…]

U.S. Treasuries finished mixed with longer-dated maturities continuing to show relative strength. The 2-yr yield increased one basis point to 0.21%, while the 10-yr yield declined three basis points to 0.63%. The U.S. Dollar Index increased 0.2% to 99.98.

[…]
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