Morning Notes – Monday February 25, 2019

Directional Bias For The Day:

• S&P Futures are higher; moving up since 3:30 PM on Thursday
• Odds are for an up day – watch for break below 2794.50 for change of fortune
• Key economic data due:
  • Final Wholesale Inventories (est. 0.3%; prev. 0.3%) at 10:00 AM

Sentiment & Catalyst

• Risk-on mood since the weekend when signs of trade-tariff issue beginning to getting resolved

Markets Around The World

• Markets in the East closed higher
• European markets are mostly higher – U.K. and Italy are down
• Currencies:
  

  Up	Down
  EUR/USD GBP/USD USD/JPY AUD/USD NZD/USD	Dollar index USD/CHF USD/CAD USD/INR

• Commodities:
  

  Up	Down
  NatGas Copper Platinum Palladium Coffee Cotton	Crude Oil Gold Silver Sugar Cocoa

• Bonds
  • 10-yrs yield is at 2.676%, up from February 22 close of 2.655%;
  • 30-years is at 3.038%, up from 3.020%
  • 2-years yield is at 2.508%, up from 2.491%
  • The 10-Year-&-2-Year spread is at 0.168, up from 0.164

Key Levels:

• Critical support levels for S&P 500 are 2781.58, 2774.93 and 2764.55
• Critical resistance levels for S&P 500 are 2800.18, 2806.79 and 2814.75
• Key levels for eMini futures: break above 2805.50, the high of 6:00 AM and break below 2794.50, the low of 9:30 PM on Sunday

Pre-Open

• On Friday, at 4:00 PM, S&P future (January contract) closed at 2792.25 and the index closed at 2792.67 – a spread of about -0.50 points; futures closed at 2791.25 for the day; the fair value is +1.00
• Pre-NYSE session open, futures price action is to the upside – at 7:30 AM, S&P 500 futures were up by +12.00; Dow by +148; and NASDAQ by +46.50

Directional Bias Before Open

• Weekly: Downtrend reversing
• Daily: Up
• 120-Min: Up
• 30-Min: Up
• 15-Min: Up
• 6-Min: Up

The trend and patterns on various time frames for S&P 500:

Previous Session

Major U.S. indices closed mostly higher on Friday February 22 in mostly higher volume. Dow Jones Transportation Average traded lower in lower volume. For the week, major indices rose but in lower volume, but the week had one fewer trading days than average week.

From Briefing.com:

The S&P 500 increased 0.6% this holiday-shortened trading week. This week featured the seventh round of U.S.-China trade talks and some reassurance from the Federal Reserve. The benchmark index increased its rally from the December 24 low to 18.8%.

The Dow Jones Industrial Average gained 0.6%, the Nasdaq Composite gained 0.7%, and the Russell 2000 gained 1.3%.

The S&P 500 utilities (+2.4%), materials (+2.3%), and information technology (+1.4%) sectors outperformed the broader market. Conversely, the energy (-0.5%), and consumer staples (-0.3%) sectors were the lone groups that finished with losses this week.

[…]

The main takeaway from the FOMC Minutes was that the Fed is going to be patient in raising rates and is likely to stop reducing the assets on its balance sheet later this year. The surprise – or maybe the important revelation – for the market to consider was the implication that the Fed could turn away from a “patient” mindset with raising interest rates if market uncertainty abates.
With the Fed maintaining its market-friendly position and U.S.-China trade talks seemingly progressing, or not getting worse, investors continued to not be too bothered by disappointing economic data.

[…]

• S&P 500 Sectors