Morning Notes – Tuesday February 26, 2019

Directional Bias For The Day:

•   S&P Futures are lower; moved down from a high of 2814.00 at 11:00 AM on Monday to 2783.25 by 9:30 AM;
• Moving up since 9:30 PM and forming an up-sloping flag, a break below it would be bearish
• Odds are for a down day – watch for break above 2793.25 for change of fortune
• Key economic data due:
  • Building Permits (1.33M vs. 1.29M est.; 1.32M; prev. ) at 8:30 AM
  • Housing Starts (1.08M vs. 1.25M est.; 1.21M prev.) at 8:30 AM
  • HPI (0.3% vs. 0.3% est.; 0.4% prev.) at 9:00 AM
  • S&P/CS Composite 20 HPI (4.2% vs. 4.5% est.; 4.7% prev.) at 9:00 AM
  • CB Consumer Confidence (est. 1248; 120.2 prev.) at 10:00 AM

Sentiment & Catalyst

• Risk-off mood

Markets Around The World

• Markets in the East closed lower
• European markets are mostly lower – Italy and Switzerland are up
• Currencies:
  

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

• Commodities:
  

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

• Bonds
  • 10-yrs yield is at 2.654%, down from February 25 close of 2.673%;
  • 30-years is at 3.023%, down from 3.034%
  • 2-years yield is at 2.488%, down from 2.510%
  • The 10-Year-&-2-Year spread is at 0.166, up from 0.163

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 2804.48, 2813.49 and 2816.94
• Key levels for eMini futures: break above 2793.25, the high of 7:30 AM and break below 2787.50, the low of 6:30 AM

Pre-Open

• On Monday, at 4:00 PM, S&P future (January contract) closed at 2796.50 and the index closed at 2796.11 – a spread of about +0.50 points; futures closed at 2797.00 for the day; the fair value is -0.50
• Pre-NYSE session open, futures price action is to the downside – at 8:30 AM, S&P 500 futures were down by -6.75; Dow by -122; and NASDAQ by -27.75

Directional Bias Before Open

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

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

Previous Session

Major U.S. indices closed mostly higher on Monday February 25 in mostly higher volume. Russell 2000 and Dow Jones Transportation Average were down. S&P 500 and Russell 2000 traded in lower volume. The indices gapped up at the open but the move higher faltered in the morning and then they mostly drifted down. Most were barely able to maintain the gap before the gap. Transports closed its gap and the NYSE Composite almost closed its gap.

From Briefing.com:

The S&P 500 advanced as much as 0.8% on Monday after President Trump said he will delay the March 1 trade deadline as negotiations with China have progressed favorably. The benchmark index, however, steadily retreated throughout the session, ultimately finishing higher by 0.1%.

The Dow Jones Industrial Average (+0.2%), the Nasdaq Composite (+0.4%), and the Russell 2000 (-0.1%) also finished near their session lows.

…]

The S&P 500 materials (+0.7%), information technology (+0.5%), financials (+0.4%), and industrial (+0.4%) sectors outperformed the broader market.

[…]

The Philadelphia Semiconductor Index increased 0.8%.

[…]

Conversely, the real estate (-0.8%), utilities (-0.6%), consumer staples (-0.5%), and consumer discretionary (-0.3%) sectors finished the session with losses. The underperformance from the consumer discretionary sector was a drag on the broader market considering it was up as much as 0.7% in the opening minutes of trading.

U.S. Treasuries closed on a lower note, pushing yields higher across the curve. The 2-yr yield increased three basis points to 2.51%, and the 10-yr yield increased two basis points to 2.67%. The U.S. Dollar Index declined 0.1% to 96.42. WTI crude lost 3.1% to $55.45/bbl.

Separately, Wholesale Inventories for December increased 1.1% (Briefing.com consensus +0.4%). The November reading was revised up to 0.4% from 0.3%.

[…]

• S&P 500 Sectors