Morning Notes – Tuesday April 28, 2020

/ April 28, 2020

Directional Bias For The Day:

  • S&P Futures are higher; moving sideways to up since 5:45 AM after moving up from 12:00 AM
  • The odds are for an up day – watch for break below 2898.25 for change of fortune
  • Key economic data due:
    • Good Trade Balance (-64.2B vs. -55.0B est.; prev. -59.9B) at 8:30 AM
    • Prelim Wholesale Inventories (-1.0% vs. -0.4% est.; prev. -0.7%) at 8:30 AM
    • S&P/CS Composite-20 HPI ( 3.5% vs. 3.1% est.; prev. 3.1%) at 9:00 AM
    • CB Consumer Confidence ( 88.3 est.; prev. 120.0) at 10:00 AM
    • Richmond Manufacturing Index ( -41 est.; prev. 2) at 10:00 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 2887.72, 2867.38 and 2852.89
  • Critical resistance levels for S&P 500 are 2929.70, 2937.79 and 2943.88
  • Key levels for eMini futures: break above 2916.00, the high of 6:00 PM on March 8 and break below 2898.00, the low of 7:00 AM

Pre-Open

  • On Monday at 4:00 PM, S&P future (June 2020) closed at 2869.25 and the index closed at 2878.48 – a spread of about -9.25 points; futures closed at 2869.00 for the day; the fair value is -0.25
  • Pre-NYSE session open, futures are higher – at 8:30 AM, S&P 500 futures were up by +37.50; Dow by +373 and NASDAQ by +92.00

Markets Around The World

  • Markets in the East closed mixed – Hong Kong, Mumbai, Seoul and Singapore closed up; Shanghai, Tokyo and Sydney closed down
  • European markets are higher
  • Currencies:
    Up Down
    • EUR/USD
    • GBP/USD
    • AUD/USD
    • NZD/USD
    • Dollar index
    • USD/JPY
    • USD/CHF
    • USD/CAD
    • INR/USD
  • Commodities:
    Up Down
    • NatGas
    • Silver
    • Copper
    • Platinum
    • Palladium
    • Sugar
    • Coffee
    • Cotton
    • Cocoa
    • Crude Oil
    • Gold
  • Bond
    • 10-yrs yield closed at 0.656%, up from April 24 close of 0.596%;
    • 30-years is at 1.251%, up from 1.177%
    • 2-years yield is at 0.270% up from 0.224%
    • The 10-Year-&-2-Year spread is at 0.429 up from 0.379
  • VIX
    • Is at 31.58 down -1.71 from April 27 close; below 5-day SMA;
    • Down from all time high of 85.47 on March 18; recent high 47.77 on April 21, recent low 37.31 on April 14
    • Risk-On

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 24 was a long-legged Doji (with small upper shadow);
    • Stochastic (9,1, 3): %K is above %D above 50
    • RSI (9) is moving higher; near 50
  • Last week was down -37.82 or -1.3%; the 5-week ATR is 254.90
  • Last week’s pivot point=2810.94, R1=2894.78, R2=2952.82; S1=2752.90, S2=2669.06; S1 pivot level was breached
  • A down week; second in last five weeks and sixth 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 relatively small green candle that gapped up at the open; with almost no lower shadow and small upper shadow; at a resistance near 2882.00
    • 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 above %D; above 90
    • RSI-9 turning up; moving up in zig-zag manner; above 60; above 8-day RSI;
  • Above 20-day EMA, 50-day EMA; below 100-day SMA and 200-day SMA;
  • In Correction; uptrend since March 23
2-Hour (e-mini future)
  • Same as on Monday but higher Moving along below the uptrend line from March 23 that was broken on April 21; rising in steps since 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
    • Sequence of higher highs & higher lows since 10:00 AM on March 23 is broken; new sequence of higher high and lower highs since April 21
    • RSI-21 moving up after declining to 35 at 8:00 PM on April 23; above 80;
    • %K is crossing below %D near 100
  • Above 20-bar EMA, which is above EMA10 of EMA50
  • Bias: Up
30-Minute (e-mini future)
  • Moving up since 8:00 PM on April 21; moved sideways to up from 1:30 AM on Monday to 3:00 AM and moving up since
    • ABCD (A=2717.25, B=2836.75, C=2755.25); 100% extension target for D near 2874.00 is achieved and 161.8% extension target is near 2948.00
    • RSI-21 is moving higher since 12:00 AM from 50 to above 70;
    • %K is crisscrossing %D higher
  • Above EMA20, which is above EMA10 of EMA50
  • Bias: Up
15-Minute (e-mini future)
  • Bollinger Band (20, 2.0) moving up since 3:15 AM
  • The Bollinger Band narrowing since 3:15 AM with price mostly walking up the upper band
    • Stochastic (9, 1, 3): %K is crisscrossing %D; above 80
  • Bias: Up

Previous Session

Major U.S. indices closed higher on Monday, April 27 in mostly higher volume. S&P 500 traded in lower volume. Indices opened higher and then mostly traded higher closing near the highs for the day. Most indices are at a resistance ;eve; created by the down-gap of March 9. NASDAQ Composite and Russell 2000 are breaking above it. All S&P sectors closed up.

From Briefing.com:

The S&P 500 gained 1.5% on Monday, as investors showed optimism in reopening efforts indicated by more states and countries. The Dow Jones Industrial Average (+1.5%) and Nasdaq Composite (+1.1%) also advanced more than 1.0%, while the Russell 2000 outperformed with a 4.0% gain.

[…]

For instance, all 11 S&P 500 sectors ended the day higher, but strength was found in the S&P 500 financials (+3.6%) and materials (+2.6%) sectors, the Dow Jones Transportation Average (+2.8%), and the SPDR S&P Retail ETF (XRT 36.36, +1.82, +5.3%). The consumer staples sector (+0.3%) underperformed.

[…]

U.S. Treasuries finally showed some weakness amid the bullish price action in equities. The 2-yr yield increased three basis points to 0.23%, and the 10-yr yield increased six basis points to 0.66%. The U.S. Dollar Index declined 0.3% to 100.07.

[…]
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