DAILY BONDS, STOCKS, & CURRENCY COMMENTARY Friday March 13, 2020 BONDS COMMENTARY 03/13/20 The bulls obviously retain control buy breaks OVERNIGHT CHANGES THROUGH 3:16 AM (CT): BONDS -6 Traders should expect tremendous volatility in Treasuries to continue with the historic 5 day high to low trading range of 20 full points obviously upending structural conditions within the marketplace. In fact epic monetary easing, epic governmental stimulus plans and a throwing of the kitchen sink at deflation, flies against the unending bull market in Treasuries. Obviously many market participants think the Fed should immediately push interest rates to zero with another contingent of the market suggesting a negative interest rate structure is justified. On the other hand, seeing June bond prices at 191-22 could have pushed pricing to a level that is basically the "full gas pedal" of known policy actions with the final step from the Fed likely to be Fed purchases of mortgages in addition to purchasing of US Treasuries. In fact a major fund manager has indicated quantitative easing should "start" with $200 billion. It should be noted that the news of bond buying by the Fed did result in a dead cat bounce in equities yesterday that quickly dissipated. In the bull's defense the most recent positioning report showed a net spec and fund long a mere fraction of the all-time record long and one would assume that current conditions justify at least a return to the vicinity record spec and fund long positioning in bonds. On the other hand, since the last positioning report the bond market rallied 24 points and that should make the net spec and fund long the largest since 2017. In looking ahead, we doubt today's scheduled data will have much of a lasting impact, but a very sizable (perhaps record decline) in consumer sentiment will likely provide some buying. We would also suspect that the Fed will be very vocal and that they are being driven in the short term by the action in equities as they attempt to relieve market anxiety. The North American session will start out with the February import price index which is expected to have a moderate uptick from the previous 0.3% reading while the February export price index is forecast to have a modest downtick from the previous 0.5% reading. A private survey on March consumer sentiment is expected to have a sizable downtick from the previous 101.0 reading. TODAY'S MARKET IDEAS: We suspect that the overnight low in June bonds is some form of solid technical and fundamental low. Limiting the upside is the initial gains in non-Asian equity markets and news that Chinese new infections posted a single digit expansion for the 2nd day in a row as that offers some possible future endgame to the spread outside of China. On the other hand, consumer anxiety is running rampant with purchases of necessary items exploding, anxiety bordering on panic and unrelenting interest limited recently to US bonds and notes. We see support levels today at 174-16 and at 173-24 and at a very key technical point at 172-05 in June Bonds. NEW RECOMMENDATIONS: None. PREVIOUS RECOMMENDATIONS: None. BONDS TECHNICAL OUTLOOK: Note: Data is collected using the closing values of the previous session and calculations and analysis are run at the same time. Technical commentary is based solely on statistical indicators and does not necessarily correspond to any fundamental analysis that may appear elsewhere in this report. Data sources can and do produce bad ticks that can cause computation errors. Please verify before use. BONDS (JUN) 03/13/2020: Momentum studies trending lower at mid-range should accelerate a move lower if support levels are taken out. The close above the 9-day moving average is a positive short-term indicator for trend. A negative signal was given by the outside day down. The market's close below the 1st swing support number suggests a moderately negative setup for today. The next downside target is 172-030. The next area of resistance is around 182-040 and 186-280, while 1st support hits today at 174-240 and below there at 172-030. 10 YR TREASURY NOTES (JUN) 03/13/2020: Stochastics turning bearish at overbought levels will tend to support lower prices if support levels are broken. A positive signal for trend short-term was given on a close over the 9-bar moving average. The upside daily closing price reversal gives the market a bullish tilt. The market tilt is slightly negative with the close under the pivot. The next downside target is 135-085. The next area of resistance is around 138-220 and 140-060, while 1st support hits today at 136-075 and below there at 135-085. STOCKS COMMENTARY 03/13/20 Impressive early gains should foster bottom picking OVERNIGHT CHANGES THROUGH 3:16 AM (CT): S&P 500 +91 Global equity markets overnight were mixed with a sprinkling of markets in Asia following through on the downside while the rest of the world showed gains from 2% to as much as 4% in Australia. Until there is some sign of containment in the US and a lack of spread in Europe from Italy, it is difficult to see this morning's bounce as a major and sustained bottom. Obviously the situation will remain highly fluid but traders should expect the Fed to be out in force, with supportive dialogue and or possible tools to prop up the economy! S&P 500: The recovery in the S&P this morning is very notable and would appear to be more significant than the typical "dead cat bounce". It is also possible that the net spec and fund long has now been removed with the March S&P (June becomes the front month Monday) falling by 745 points since the last report was measured! Key support is seen today at 2442.50 with shorter term support seen at 2523.00. Other US Indexes: Like the S&P, the Dow futures are showing a significant recovery with the market at times gaining more than 1000 points. On the other hand the virus situation has obviously not run its course yet and the best hope of the bull camp is further government stimulus and or a chorus of supportive Fed promises. Critical support in the Dow is seen at 21,524 and then again down at 21,372. To make a more significant reversal signal the March contract needs a trade above 22,317 after the NYSE opening. The NASDAQ should continue to see support from the tech sector as a number of companies will see significant improvement in revenues with support today seen at 7400 and then again down at 7272.75. In order to give the bull camp an added technical boost the NASDAQ will need to climb above 7620.00 into and through the NYSE opening. TODAY'S MARKET IDEAS: Unless virus news today is positive the bounce this morning should be considered a dead cat bounce. On the other hand the magnitude of the gains would seem to telegraph something more than a simple technical bounce! NEW RECOMMENDATIONS: None. PREVIOUS RECOMMENDATIONS: None. STOCKS TECHNICAL OUTLOOK: Note: Data is collected using the closing values of the previous session and calculations and analysis are run at the same time. Technical commentary is based solely on statistical indicators and does not necessarily correspond to any fundamental analysis that may appear elsewhere in this report. Data sources can and do produce bad ticks that can cause computation errors. Please verify before use. S&P E-MINI (MAR) 03/13/2020: Momentum studies are declining, but have fallen to oversold levels. The market's close below the 9-day moving average is an indication the short-term trend remains negative. The market is in a bearish position with the close below the 2nd swing support number. The next downside target is 2214.75. The 9- day RSI under 30 indicates the market is approaching oversold levels. The next area of resistance is around 2633.50 and 2866.75, while 1st support hits today at 2307.50 and below there at 2214.75. MINI-DOW (MAR) 03/13/2020: The market broke to a new contract low. Daily stochastics are trending lower but have declined into oversold territory. The market's short-term trend is negative as the close remains below the 9- day moving average. The close below the 2nd swing support number puts the market on the defensive. The next downside target is 18864. Some caution in pressing the downside is warranted with the RSI under 30. The next area of resistance is around 22560 and 24653, while 1st support hits today at 19666 and below there at 18864. E-MINI NASDAQ (MAR) 03/13/2020: Momentum studies are still bearish but are now at oversold levels and will tend to support reversal action if it occurs. The close below the 9-day moving average is a negative short-term indicator for trend. The defensive setup, with the close under the 2nd swing support, could cause some early weakness. The next downside target is 6519.25. Some caution in pressing the downside is warranted with the RSI under 30. The next area of resistance is around 7686.00 and 8356.25, while 1st support hits today at 6767.50 and below there at 6519.25. DAILY TECHNICAL STATISTICS 14 DAY 14 DAY 9 DAY 14 DAY SLOW SLOW 4 DAY 9 DAY 18 DAY 45 DAY 60 DAY CLOSE RSI RSI STOCH D STOCH K M AVG M AVG M AVG M AVG M AVG FINANCIAL COMPLEX USAAM20 178-140 64.54 67.46 73.44 62.95 181.04 176.97 171.18 164.17 162.13 TYAAM20 137-145 69.32 71.66 78.99 70.96 137.98 137.03 134.74 131.94 131.05 SPAH20 2468.90 21.58 24.07 17.35 9.75 2705.68 2886.58 3045.63 3202.17 3208.18 EPH20 2470.50 22.90 25.24 18.06 10.67 2705.50 2886.69 3047.10 3202.92 3208.74 ENQH20 7226.75 25.54 28.57 20.15 12.45 7875.44 8327.31 8726.85 9030.89 8959.48 YMH20 21113 22.06 24.29 17.41 9.81 23343.25 24953.78 26359.50 27938.51 28079.53 Calculations based on previous session.