Morning Notes – Thursday February 28, 2019

Directional Bias For The Day:

• S&P Futures are lower; moving up since 2:00 AM from 2781.75; moving sideways to higher since 3:45 AM
• Odds are for a sideways to an up day – watch for break below 2785.50 for change of fortune
• Key economic data due:
  • Advanced GDP (2.6% vs. 2.2% est.; 3.4% prev.) at 8:30 AM
  • Advanced GDP Price Index (1.8% vs. 1.7% est.; 1.8% prev.) at 8:30 AM
  • Unemployment Claims (225K vs. 221K est.;216K prev.) at 8:30 AM
  • Chicago PMI (est. 57.3; 56.7 prev.) at 9:45 AM

Sentiment & Catalyst

• Rick-off mood

Markets Around The World

• Markets in the East closed mostly lower – Sydney was down
• European markets are mostly lower – Spain and Italy are up
• Currencies:
  

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

• Commodities:
  

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

• Bonds
  • 10-yrs yield is at 2.684%, down from February 27 close of 2.693%;
  • 30-years is at 3.067%, down from 3.069%
  • 2-years yield is at 2.500%, down from 2.508%
  • The 10-Year-&-2-Year spread is at 0.184, down from 0.185

Key Levels:

• Critical support levels for S&P 500 are 2789.06, 2779.42 and 2775.13
• Critical resistance levels for S&P 500 are 2795.76, 2803.12 and 2811.17
• Key levels for eMini futures: break above 2791.75, the high of 8:30 AM and break below 2785.50, the low of 5:00 AM

Pre-Open

• On Wednesday, at 4:00 PM, S&P future (January contract) closed at 2792.75 and the index closed at 2792.38 – a spread of about +0.50 points; futures closed at 2795.00 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 -3.25; Dow by -6; and NASDAQ by -21.25

Directional Bias Before Open

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

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

Previous Session

Major U.S. indices closed mixed on Wednesday February 27 in mixed volume. S&P 500, Dow Jones Industrial Average and Dow Jones Transportation Average closed down. NASDAQ Composite, Russell 2000, NYSE Composite and Wilshire 5000 Total Market Index closed up. DJIA, DJT and Russell 2000 traded in lower volume. NASDAQ Composite and S&P 500 traded in higher volume. The large cap indices made doji or doji like candlesticks.

From Briefing.com:

The S&P 500 lost 0.1% on Wednesday as investors weighed a handful of headlines on the political, monetary, and geopolitical fronts, as well as the latest batch of earnings reports. The benchmark index was down as much as 0.7% in early trading action but climbed back to its flat line in the afternoon, where it faced some continued resistance near the 2800 level.

The Dow Jones Industrial Average lost 0.3%. The Nasdaq Composite (+0.1%) and the Russell 2000 (+0.2%), however, finished higher.

The S&P 500 health care (-0.5%), real estate (-0.4%), and communication services (-0.4%) sectors underperformed the broader market. Conversely, the energy (+0.4%), financials (+0.4%), and industrial (+0.4%) sectors outperformed.

[…]

U.S. Treasuries were also under pressure, driving yields higher in a curve-steepening trade. The 2-yr yield increased three basis points to 2.51%, and the 10-yr yield increased six basis points to 2.69%. The U.S. Dollar Index increased 0.2% to 96.15. WTI crude rose 2.4% to $56.94/bbl following some bullish inventory data.

[…]

• Pending Home Sales increased 4.6% in January (Briefing.com consensus -0.4%). Today’s reading follows a revised reading of -2.3% in December (from -2.2%).
• Factory orders increased 0.1% in December (Briefing.com consensus +1.0%) following an upwardly revised 0.5% decline (from -0.6%) in November.
o The key takeaway from the report was the understanding that business investment was weak, evidenced by the 1.0% decline in nondefense capital goods orders, excluding aircraft, that followed a 1.1% decline in November. That will compute as a negative input for Q4 GDP forecasts.
• Advance report for International Trade in Goods for December showed a deficit of $79.5 billion, the Advance report for Wholesale Inventories for December showed an increase of 1.1%, and the Advance report for Retail Inventories for December showed an increase of 0.9%.
• The weekly MBA Mortgage Applications Index increased 5.3% following a 3.6% increase in the prior week.

• S&P 500 Sectors