Directional Bias For The Day:
- S&P Futures are higher; moving higher since 4:30 PM on Tuesday;
- Daily and weekly trend is down but futures are ripe for a bounce
- Odds are for an up day with choppiness and elevated volatility – watch for break below 2545.50 for change of fortune;
- Key economic data due:
- Existing Home Sales ( est. 5.20M and 5.22M prev.) at 10:00 AM
- FOMC Economic Projections at 2:00 PM
- FOMC Statement at 2:00 PM
- Fed Funds Rate at 2:00 PM
- FOMC Press Conference at 2:30 PM
Markets Around The World
- Markets in the East closed mixed – Shanghai, Tokyo and Sydney closed down; Hong Kong, Mumbai, Seoul and Singapore closed up
- European markets are higher
- Dollar index
- Crude Oil
- 10-yrs yield is at 2.810%, down from December 18 close of 2.819%;
- 30-years is at 3.063%, down from 3.071%
- 2-years yield is at 2.671%, down from 2.696%
- The 10-Year-&-2-Year spread is at 0.160, down from 0.166
- Critical support levels for S&P 500 are 2528.71, 2521.58 and 2507.35
- Critical resistance levels for S&P 500 are 2559.35, 2572.45 and 2600.91
- Key levels for eMini futures: break above 2562.50, the high of 7:00 AM and break below 2550.50, the low of 3:30 AM
- On Tuesday, at 4:00 PM, S&P future (January contract) closed at 2548.75 and the index closed at 2546.16 – a spread of about +2.50 points; futures closed at 2538.00 for the day; the fair value is +10.75
- Pre-NYSE session open, futures price action is to the upside – at 8:45 AM, S&P 500 futures were up by +16.50; Dow by +162; and NASDAQ by +37.50
Directional Bias Before Open
- Weekly: Uptrend Under Pressure
- Daily: In Correction
- 120-Min: Down
- 30-Min: Down-Side
- 15-Min: Down-Side
- 6-Min: 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 mixed on Tuesday December 18. Russell 2000, NYSE Composite and Wilshire 5000 Total Market Index closed down. S&P 500 was barely changed and other were higher. The volume was mostly lower. Russell 2000 traded in higher volume.
Indices gapped up at the open and then traded higher till mid-day when they turned down and gave up a large portion of day’s gains.
The S&P 500 finished flat on Tuesday in what was another roller-coaster session, driven by shifts in sector leadership, a 7.2% plunge in oil prices to $46.57 per barrel, and lingering uncertainty surrounding trade, monetary policy, the economic growth outlook, and the budget battle in Washington to keep the government open.
The benchmark index was up as much as 1.1% in early action, bolstered by some technical buying after the S&P 500 managed to hold support at its February low (2532.69) on Monday. That rally, however, would not hold up.
The Dow Jones Industrial Average (+0.4%) and the Nasdaq Composite (+0.5%) managed to squeeze out some modest gains, yet they also finished well off their best levels of the day. The Russell 2000 shed 0.1%.
The S&P 500 sectors were mixed with consumer discretionary (+1.0%) and real estate (+1.0%) on the winning end, and energy (-2.4%) and consumer staples (-1.2%) on the losing end.
The S&P 500 financial sector (-0.5%) was another notable laggard and it stood out as the poster child for selling into strength.
Also weighing on sentiment was the fact that oil prices continued to get clobbered amid ongoing concerns over excess supply and slowing economic growth. WTI crude dropped 7.2% to $46.57/bbl, closing at its lowest level since September 2017. The oil-sensitive energy sector underperformed with a loss of 2.4%.
Those concerns, and concerns about the stock market’s fortunes, showed up in the gains registered by the Treasury market and CBOE Volatility Index (VIX 25.58, +1.06, +4.3%) even while stocks were rallying. The Fed-sensitive 2-yr yield lost four basis points to 2.66%, and the benchmark 10-yr yield lost three basis points to 2.82%. The U.S. Dollar Index lost 0.1% to 97.05.
The key takeaway from the report is that it substantiates the weakening levels of homebuilder confidence and is a reflection of the impact rising interest rates are having on single-family construction activity.
- 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|