Market Remarks

Morning Notes – Wednesday April 29, 2020

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are higher; moving sideways since 9:30 PM after bouncing up from NYSE close on Tuesday
  • Broke above Double Bottom on 15-minute charts at 8:30 AM
  • Economic news will have significant impact on price-action
  • The odds are for an up day with elevated volatility – watch for break above 2881.00 for change of fortune
  • Key economic data due:
    • Advanced GDP ( -4.8% vs. -4.0% est.; prev.2.1%) at 8:30 AM
    • Advanced GDP Price Index (1.3% vs. 1.0% est.; prev. 1.3%) at 8:30 AM
    • Pending Home Sales ( -13.3% est.; prev. 2.4%) at 10:00 AM
    • FOMC Statement at 2:00 PM
    • Fed Funds Rate ( >0.25% est.; prev. <0.25%) at 2:00 PM
    • FOMC Press Conference at 2:30 PM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 2889.68, 2860.71 and 2852.89
  • Critical resistance levels for S&P 500 are 2905.54, 2921.15 and 2929.70
  • Key levels for eMini futures: break above 2901.00, the high of 2:00 AM and break below 2887.50, the low of 3:30 AM

Pre-Open

  • On Tuesday at 4:00 PM, S&P future (June 2020) closed at 2856.00 and the index closed at 2863.39 – a spread of about -7.25 points; futures closed at 2867.25 for the day; the fair value is -11.25
  • Pre-NYSE session open, futures are higher – at 8:30 AM, S&P 500 futures were up by +35.75; Dow by +338 and NASDAQ by +119.00

Markets Around The World

  • Markets in the East closed higher – Tokyo was closed for trading
  • European markets are mixed – Germany, U.K., Spain and Italy are higher, France, Switzerland and STOXX 600 are down
  • Currencies:
    Up Down
    • EUR/USD
    • AUD/USD
    • NZD/USD
    • Dollar index
    • GBP/USD
    • USD/JPY
    • USD/CHF
    • USD/CAD
    • INR/USD
  • Commodities:
    Up Down
    • Crude Oil
    • NatGas
    • Silver
    • Copper
    • Platinum
    • Palladium
    • Sugar
    • Coffee
    • Cotton
    • Cocoa
    • Gold
  • Bond
    • 10-yrs yield closed at 0.610%, down from April 27 close of 0.656%;
    • 30-years is at 1.206%, down from 1.251%
    • 2-years yield is at 0.234% down from 0.227%
    • The 10-Year-&-2-Year spread is at 0.376 down from 0.429
  • VIX
    • Is at 32.84 down -0.73 from April 28 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-Off to Neutral

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 red candle that opened higher but the closed almost near the open of previous day; almost no lower shadow and small upper shadow; turning down at a resistance
    • 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 turning down; 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 & Tuesday but higher; moving along just 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 to near 60 after declining to below 50 at NYSE close
    • %K is crossing below %D near 75
  • Above 20-bar EMA, which is above EMA10 of EMA50
  • Bias: Up
30-Minute (e-mini future)
  • Moving mostly sideways 9:30 PM;
    • 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 along 50;
    • %K is crisscrossing %D higher
  • Above EMA20, which is above EMA10 of EMA50
  • Bias: Up-Side
15-Minute (e-mini future)
  • Bollinger Band (20, 2.0) moving sideways to down since 0:30 AM
  • The Bollinger Band narrowing since 5:45 AM with price mostly near the middle band
    • Stochastic (9, 1, 3): %K crossed above %D at 6:30 AM from 20
  • Bias: Up-Side

Previous Session

Major U.S. indices closed mixed on Tuesday, April 28 in higher volume. S&P 500, Dow Jones Industrial Average, NASDAQ Composite and Wilshire 5000 Total Market Index traded down. Russell 2000, Dow Jones Transportation Average and NYSE Composite closed up. The indices opened higher making day’s high but then mostly traded down. All but three S&P sectors – Technology, Healthcare, Telecom – closed higher.

From Briefing.com:

The S&P 500 declined 0.5% on Tuesday in a mixed session. Large-cap technology and health care stocks lagged, while reopening enthusiasm continued to flow into the small-cap Russell 2000 (+1.3%) and S&P MidCap 400 (+1.0%). The Dow Jones Industrial Average shed 0.1%, while the Nasdaq Composite fell 1.4%.

[…]

Some of those included the small-cap and mid-cap stocks, as previously noted, but also the cyclical S&P 500 energy (+2.2%), materials (+2.0%), industrials (+1.8%), and financials (+0.9%) sectors.

Conversely, the large-cap stocks that were deemed as relatively safe, and thus outperformed over the past few months, lost some of their appeal today and heavily dragged on the broader market. Those were found in the health care (-2.1%), communication services (-1.9%), and information technology (-1.4%) sectors.

[…]

U.S. Treasuries reclaimed most of yesterday’s losses, driving yields lower across the curve. The 2-yr yield declined three basis points to 0.20%, and the 10-yr yield declined five basis points to 0.61%. The U.S. Dollar Index declined 0.2% to 99.88. WTI crude declined 4.6%, or $0.60, to $12.37/bbl, although it was down as much as 22% at one point during the session.

[…]

• The Conference Board’s Consumer Confidence Index for April plunged to 86.9 (Briefing.com consensus 86.5) from a downwardly revised 118.8 (from 120.0) for March. The April reading is the lowest since June 2014.
o The key takeaway from the report is that consumers, while thinking positively about things reopening again, are still less optimistic about their financial prospects, which could be a headwind for spending activity during the recovery phase.
• The advance goods trade deficit totaled $64.2 bln in March after a $59.9 bln deficit in February. Advance retail inventories declined 1.3% in March after decreasing 0.3% in February. Advance wholesale inventories decreased 1.0% in March after decreasing 0.7% in February.
• The S&P Case-Shiller Home Price Index for February increased 3.5% (Briefing.com consensus 3.7%).

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