Directional Bias For The Day:
- S&P Futures are higher; moving higher since 6:00 PM on Tuesday and after making a bullish divergence
- Bias on daily timeframe is to the down side; intraday bias for NYSE open is to the upside; odds are for a choppy day with elevated volatility – watch for break above 2666.75 and break below 2648.75 for clarity
- Key economic data due:
- Durable Goods Orders (-4.4% vs. -2.2% est. and 0.7% prev.) at 8:30 AM
- Core Durable Goods Orders ((0.1% vs. 0.4% est. and 0.0% prev.) at 8:30 AM
- Unemployment Claims (224K vs. 215K est. and 221K prev.) at 8:30 AM
- Revised UoM Consumer Sentiment (est. 98.4 and 98.3 prev. ) at 10:00 AM
- Existing Home Sales (est. 5.20M and 51.15M prev. ) at 10:00 AM
Markets Around The World
- Markets in the East closed mixed – Shanghai, Hong Kong and Singapore closed up; Tokyo, Sydney, Mumbai and Seoul closed down
- European markets are higher
- Dollar index
- Crude Oil
- 10-yrs yield is at 3.065%, up from November 20 close of 3.048%;
- 30-years is at 3.317%, up from 3.305%
- 2-years yield is at 2.812%, up from 2.808%
- The 10-Year-&-2-Year spread is at 0.253, up from 0.240
- Critical support levels for S&P 500 are 2637.66, 2631.52 and 2603.54
- Critical resistance levels for S&P 500 are 2669.54, 2681.09 and 2696.81
- Key levels for eMini futures: break above 2666.75, the high of 8:00 AM and break below 2648.75, the low of 6:00 AM
- On Tuesday, at 4:00 PM, S&P future (December contract) closed at 2642.50 and the index closed at 2641.89 – a spread of about +0.50 points; futures closed at 2640.00 for the day; the fair value is +2.50
- Pre-NYSE session open, futures price action is to the upside – at 9:00 AM, S&P 500 futures were up by +19.50; Dow by +148; and NASDAQ by +72.50
Directional Bias Before Open
- Weekly: In Correction
- Daily: In Correction
- 120-Min: Down
- 30-Min: Down-Side
- 15-Min: Down-Side
- 6-Min: Side-Up
The trend and patterns on various time frames for S&P 500 are:
|2-Hour (e-mini future)||
|30-Minute (e-mini future)||
|15-Minute (e-mini future)||
Major U.S. indices closed lower on Tuesday November 20 in higher volume. Indices opened with a gap down and then increased their losses during the day. Indices also erased the gains for the year with NASDAQ Composite almost unchanged.
The S&P 500 tumbled again on Tuesday with a loss of 1.8%, as economic growth concerns weighed, especially on energy, retail, and technology stocks. Tuesday’s losses wiped out yearly gains for the benchmark index, which is now down 1.2% in 2018.
The Dow Jones Industrial Average lost 2.2%, the Nasdaq Composite lost 1.7%, and the Russell 2000 lost 1.8%.
There is a palpable sense of real angst about the market’s prospects as market commentary is beginning to emphasize the growing risk of a bear market. Commentary has included rising recession risk; widening corporate credit spreads; forecasting message of the sharp losses in cyclical sectors and former leadership stocks/sectors; lack of both gains and buy-the-dip success in November, which call into question the prospects of a seasonal rally; and burgeoning calls to bolster defensive positioning in investment portfolios.
S&P sectors that underperformed the broader market on Tuesday were the cyclical energy (-3.3%), consumer discretionary (-2.2%), information technology (-2.2%), industrials (-2.1%), and financial (-2.1%) sectors.
WTI crude, which has been pressured by ongoing supply concerns, dropped 6.9% to $53.44/bbl and extended its decline to 30.5% from its October 3 high.
- S&P 500 Sectors
|Sector||Daily Trend (Visual)||Relative Strength (Last Month – October)||Relative Strength (Current)||%K vs. %D|
|Consumer Staples||Under Pressure||XLP||XLP||Above|
|Materials||Down||XLB||XLB||Cross – Over|
|Heath Care||Under Pressure||SPY||XLV||Below|
|Real Estate||Down (Turning Up)||XLRE||XLRE||Cross – Over|