Morning Notes – Wednesday February 27, 2019

Directional Bias For The Day:

• S&P Futures are lower; broke below a Double Top after NYSE close; tracing an up-sloping flag since 4:00 AM
• Odds are for a down day – watch for break above 2793.25 for change of fortune
• No Key economic data due:

Sentiment & Catalyst

• Rick-off mood

Markets Around The World

• Markets in the East closed mixed – Shanghai, Tokyo, Sydney and Seoul were up; Hong Kong, Mumbai and Singapore were down
• European markets are mostly lower – Italy is up
• Currencies:
  

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

• Commodities:
  

  Up	Down
  Crude Oil Copper Platinum Palladium Sugar Coffee Cotton Cocoa (Unch.)	NatGas Gold Silver

• Bonds
  • 10-yrs yield is at 2.645%, up from February 26 close of 2.636%;
  • 30-years is at 3.020%, up from 3.006%
  • 2-years yield is at 2.500%, up from 2.492%
  • The 10-Year-&-2-Year spread is at 0.147, up from 0.144

Key Levels:

• Critical support levels for S&P 500 are 2789.47, 2781.58 and 2774.93
• Critical resistance levels for S&P 500 are 2793.51, 2803.12 and 2811.17
• Key levels for eMini futures: break above 2787.75, the high of 8:30 AM and break below 2783.75, the low of 8:00 AM

Pre-Open

• On Tuesday, at 4:00 PM, S&P future (January contract) closed at 2793.75 and the index closed at 2793.90 – a spread of about -0.25 points; futures closed at 2791.50 for the day; the fair value is +2.25
• Pre-NYSE session open, futures price action is to the downside – at 8:45 AM, S&P 500 futures were down by -5.00; Dow by -48; and NASDAQ by -21.25

Directional Bias Before Open

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

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

Previous Session

Major U.S. indices closed lower on Tuesday February 26 in mostly lower volume. Russell 2000 and Dow Jones Transportation Average traded in higher volume. The large cap indices made doji or doji like candlesticks. The major indices are forming a three-day evening star pattern. A closed below Tuesday will be bearish.

From Briefing.com:

The S&P 500 decreased 0.1% as it struggled for direction on Tuesday. The stock market wavered between small gains and losses while investors weighed mixed economic data, key corporate news, and comments from Fed Chair Jerome Powell.

The Dow Jones Industrial Average (-0.1%) and the Nasdaq Composite (-0.1%) also finished just below their flat lines. The Russell 2000, meanwhile, underperformed with a loss of 0.7%.

The S&P 500 materials (-0.6%), health care (-0.3%), and industrial (-0.3%) sectors underperformed the broader market. Conversely, the information technology (+0.2%), consumer discretionary (+0.2%), and communication services (+0.1%) sectors outperformed.

[…]

U.S. Treasuries saw increased buying interest, which drove yields lower across the curve. The 2-yr yield decreased three basis points to 2.48%, and the 10-yr yield decreased four basis points to 2.64%. WTI crude increased 0.3% to $55.60/bbl.

[…]

• Housing starts declined 11.2% month-over-month in December to a seasonally adjusted annual rate of 1.078 million (Briefing.com consensus 1.254 million). Building permits were up 0.3% month-over-month to a seasonally adjusted annual rate of 1.326 million (Briefing.com consensus 1.290 million).
o The key takeaway from the report is that it reinforced the understanding that new supply is slow to develop. Single-family starts fell 6.7% to 758,000, with declines in all regions, except the South (+2.2%). Meanwhile, permits for single-family units declined 2.2% to 829,000, held back by a 4.0% decline in the South, which is the largest market for new home construction.
• The Conference Board’s Consumer Confidence Index jumped to 131.4 in February (Briefing.com consensus 125.0) from an upwardly revised 121.7 (from 120.2) in January. The February reading broke a string of three consecutive monthly declines in the index.
o The key takeaway from the report is that consumers’ attitude about the outlook improved greatly, coinciding with the sharp improvement in the stock market, continued strength in the labor market, and the end of the partial government shutdown. That upbeat outlook should be a supportive factor for consumer spending.
• The Case-Shiller Home Price Index for December increased 4.2% (Briefing.com consensus 4.5%), down from a revised November reading of 4.6% (from 4.7%).
• The FHFA Housing Price Index for December increased 0.3%, down from an unrevised reading of 0.4% in November.

[…]

• S&P 500 Sectors