Directional Bias For The Day:
- S&P Futures are unchanged to lower; drifting mostly up since 6:45 PM on Sunday after gap down open for the week
- Odds are for a down day with choppiness and elevated volatility
- No key economic data due:
Markets Around The World
- Markets in the East closed lower
- European markets are mostly lower – U.K. is higher
- Dollar index
- Crude Oil
- 10-yrs yield is at 2.861%, up from December 7 close of 2.850%;
- 30-years is at 3.132%, down from 3.143%
- 2-years yield is at 2.729%, up from 2.721%
- The 10-Year-&-2-Year spread is at 0.129, unchanged
- Critical support levels for S&P 500 are 2630.94, 2623.14 and 2621.53
- Critical resistance levels for S&P 500 are 2649.75, 2664.89 and 2681.36
- Key levels for eMini futures: break above 2645.00 the high of 8:00 PM on Thursday and break below 2625.00, the low of 7:00 AM
- On Friday, at 4:00 PM, S&P future (December contract) closed at 2633.50 and the index closed at 2633.08 – a spread of about +0.50 points; futures closed at 2636.00 for the day; the fair value is -2.50
- Pre-NYSE session open, futures price action is mixed – at 8:45 AM, S&P 500 futures were up by +1.50; Dow down by -4; and NASDAQ up by +4.50
Directional Bias Before Open
- Weekly: Uptrend Under Pressure
- Daily: In Correction
- 120-Min: Down-Side
- 30-Min: Down-Side
- 15-Min: 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)||
Most major U.S. indices closed sharply lower on Friday December 7. The volume was mixed. NASDAQ Composite and Dow Jones Transportation Average traded in higher volume. The candlestick pattern for major indices was bearish engulfing.
For the week, major U.S. indices closed down with increased volume. Dow Jones Industrial Average traded in lower volume. Major indices made bearish engulfing pattern on weekly charts. Most S&P sectors also closed down. Only Utilities and Real Estate closed green for the week.
The S&P 500 fell 4.6% this week, as global growth concerns were exacerbated by negative developments regarding U.S-China trade negotiations and the continued flattening of the U.S. Treasury yield curve. The Dow Jones Industrial Average lost 4.5%, the Nasdaq Composite lost 4.9%, and the Russell 2000 lost 5.6%.
In addition, the news of the arrest of Huawei Technologies’ CFO Meng Wanzhou heightened these burgeoning trade concerns. Ms. Meng was arrested Dec. 1 in Canada amid allegations that the company violated U.S. trade sanctions on Iran. Her arrest invited worries about trade negotiations going awry in the 90-day window and potential retaliation against U.S. companies doing business in/with China.
Economic growth concerns were cast into the spotlight by a decisive curve-flattening trade in the Treasury market that featured some inversions on the short end. The 2-yr yield (2.70%) and 3-yr yield (2.71%) closed higher than the yield on the 5-yr Treasury note (2.69%) this week.
Also, the difference between the 2-yr and 10-yr yields narrowed to its slimmest margin since 2007. Specifically, the 2-yr yield lost 11 basis points to 2.70%, and the 10-yr yield lost 16 basis points to 2.85%.
The worst-performing sectors this week were the financials (-7.1%), industrials (-6.3%), materials (-5.2%), information technology (-5.1%), and health care (-4.6%) sectors. The only two sectors that escaped the week with a gain were the utilities (1.3%) and real estate (0.3%) sectors.
Transport stocks, in particular, weighed on the trade-sensitive industrial sector. The Dow Jones Transportation Average dropped 8.0% this week.
The energy sector (-3.1%) was down for the week, yet it outperformed the broader market, helped by a 3.1% bump in oil prices to $52.52 per barrel.
- 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||Cross-Under|