Directional Bias For The Day:
- S&P Futures are lower; drifting up since 5:00 AM
- Odds are for a down day with increased choppiness and elevated volatility
- Key economic data due:
- Unemployment Claims (231K vs. 226K est. and 235K prev.) at 8:30 AM
- Revised Unit Labor Costs (0.1% vs. 1.1% est. and 1.2% prev.) at 8:30 AM
- ISM Non-Manufacturing PMI (est. 59.1 and 60.3 prev.) at 10:00 AM
Markets Around The World
- Markets in the East closed lower
- European markets are lower
- Dollar index
- Crude Oil
- 10-yrs yield is at 2.869%, down from December 5 close of 2.924%;
- 30-years is at 3.130%, down from 3.178%
- 2-years yield is at 2.734%, up from 2.828%
- The 10-Year-&-2-Year spread is at 0.135, up from 0.096
- Critical support levels for S&P 500 are 2649.97, 2631.99 and 2603.54
- Critical resistance levels for S&P 500 are 2682.53, 2697.18 and 2711.29
- Key levels for eMini futures: break above 2668.25 the high of 8:30 AM and break below 2651.25, the low of 5:30 AM
- On Tuesday, at 4:00 PM, S&P future (December contract) closed at 2703.50 and the index closed at 2700.06 – a spread of about +3.50 points; futures closed at 2701.75 for the day; the fair value is +1.75
- Pre-NYSE session open, futures price action is to the downside – at 9:00 AM, S&P 500 futures were down by -43.25; Dow by -436; and NASDAQ by -140.50
Directional Bias Before Open
- Weekly: Uptrend Under Pressure
- Daily: In Correction
- 120-Min: Down
- 30-Min: Down
- 15-Min: Down
- 6-Min: Up-Side
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 sharply lower on Tuesday December 4. Indices closed below past three days’ lows in increased volume.
The S&P 500 tumbled 3.2% on Tuesday, catalyzed by waning optimism in trade negotiations between the U.S. and China and concern over future economic growth, which was signaled by the drop in U.S. Treasury yields. A technical breach of the S&P 500’s 200-day moving average (2762.32) also contributed to some selling.
Meanwhile, the Dow Jones Industrial Average lost 3.1%, the Nasdaq Composite lost 3.8%, and the Russell 2000 lost 4.4%.
Monday’s trade-relief rally was under pressure from the onset as market participants reoriented their mindset to concerns that the U.S. and China won’t be able to settle differences over major trading issues in the next 90 days.
Beyond that factor, today’s sell-off was really sparked by economic growth concerns, which manifested themselves in a decisive curve-flattening trade in the Treasury market that also featured an inversion of the 2-yr note yield (2.80%) and 3-yr note yield (2.80%) over the 5-yr note yield (2.79%). The 10-2 spread narrowed to 12 basis points, which is the narrowest spread since 2007.
The benchmark 10-yr yield dropped seven basis points to 2.92% while the 30-yr yield dropped 10 basis points to 3.17%. Those moves were exacerbated by a “pain trade,” as short sellers expecting higher rates were compelled to cover their bearish bets.
- S&P 500 Sectors
|Sector||Daily Trend (Visual)||Relative Strength (Last Month – November)||Relative Strength (Current)||%K vs. %D|
|Consumer Staples||Under Pressure||XLP||XLP||Cross-Under|
|Industrials||Down||XLI (Cross – Over)||XLI||Below|
|Heath Care||Under Pressure||XLV (Cross – Over)||XLV||Above|