Morning Notes – Tuesday January 15, 2019

Directional Bias For The Day:

  • S&P Futures are little changed; moving down since 0:30 AM after rising by nearly 20 points
  • Daily and weekly trends are down
  • Odds are for a sideways to down day with elevated volatility – watch for break above 2591.75 and break below 2577.00 for more clarity
  • Key economic data due:
    • PPI (est. -0.1%; 0.1% prev.) at 8:30 AM
    • Core PPI (est. 0.2%; 0.31% prev.) at 8:30 AM
    • Empire State Manufacturing PMI (est. 11.6; 10.9 prev. ) at 8:30 AM

Markets Around The World

  • Markets in the East closed up
  • European markets are mostly lower – U.K and Switzerland are up
  • Currencies:
    Up Down
    • Dollar index
    • USD/JPY
    • USD/CHF
    • USD/INR
    • EUR/USD
    • GBP/USD
    • AUD/USD
    • NZD/USD
    • USD/CAD
  • Commodities:
    Up Down
    • Crude Oil
    • Copper
    • Platinum
    • Palladium
    • Sugar
    • Cotton
    • NatGas
    • Gold
    • Silver
    • Coffee
    • Cocoa
  • Bonds
    • 10-yrs yield is at 2.694%, down from January 14 close of 2.710%;
    • 30-years is at 3.041%, down from 3.060%
    • 2-years yield is at 2.529%, down from 2.537%
    • The 10-Year-&-2-Year spread is at 0.165, down from 0.173

Key Levels:

  • Critical support levels for S&P 500 are 2578.22, 2570.41 and 2568.89
  • Critical resistance levels for S&P 500 are 2589.32, 2597.82 and 2600.91
  • Key levels for eMini futures: break above 2591.75, the high of 6:30 AM and break below 2577.00, the low of 4:00 PM on Monday


  • On Monday, at 4:00 PM, S&P future (January contract) closed at 2581.25 and the index closed at 2582.61 – a spread of about +1.50 points; futures closed at 2580.50 for the day; the fair value is +0.75
  • Pre-NYSE session open, futures price action is little changed – at 7:45 AM, S&P 500 futures were up by +1.00; Dow down by -2; and NASDAQ up by +24.75

Directional Bias Before Open

  • Weekly: Down
  • Daily: Down
  • 120-Min: Side
  • 30-Min: Side
  • 15-Min: Down-Side
  • 6-Min: Down

The trend and patterns on various time frames for S&P 500 are:

  • Under Pressure
  • October 2018 closed sharply lower; broke below previous four months’ lows; only third down month since October 2016; November was a harami spinning top near the lower end of October
  • Uptrend resumption since Feb 08, 2016 after a pull back of -15.2% – continues; higher highs and higher lows
  • The week ending on January 11 was a relatively large green candle with almost no upper shadow and small lower shadow; the high is near a resistance level – the low of October 2018, which was support earlier
    • Stochastics (9,1, 3) and RSI (14) moving up – %K is above %D; RSI is moving above 40
    • The index has retraced 38.2% of the decline from the high in early October 2018
    • The index reached below the 50% Fibonacci retracement level – at 2374.98 – from the rally from February 2016 low and reached a low of 2346.58; the 61.8% Fibonacci retracement is near 2251.86
    • During the week of October 22, Stochastics reached the lowest since the week of October 31, 2016; last week RSI reached the lowest since the week on August 15, 2011;
  • Last week was up +64.32 or +2.5% and ATR is 73.26
  • Last week’s pivot point=2572.88, R1=2621.20, R2=2646.4; S1=2547.94, S2=2499.62; R1 pivot level was breached;
  • An up week; third in last five weeks and fifth in last ten weeks
  • The break above an ascending triangle in May 2018 is nullified as the price has fallen below its low
  • The break above a down sloping flag on April 24 2017 is also nullified; the 161.8% extension target near 2835.46 was achieved; 100% extension target of a longer flag-pole near 2913.13 is achieved
  • Last swing low, 2532.69, was the low on February 5, 2018 and breached in December 2018
  • Below 10-week EMA and 39-week SMA; below 89-week SMA (first since June 27, 2016)
  • Downtrend
  • A small doji candle just below the open of previous day’s green real body; near the resistance created by October 29, 2018 low of 2603.54 and 50-day EMA
    • ABCD pattern emerged on January 4th; the 61.8% extension target near 2551.00 is achieved; the 100% extension target is near 2617.00
    • %K is crossing below %D over 90;
    • RSI-14 is just above 50
    • Sequence of lower highs and lower lows since October 3, 2018
  • Above 20-day EMA; below 50-day EMA, below 100-day SMA and 200-day SMA
  • Downtrend
2-Hour (e-mini future)
  • Futures are mostly moving sideways to up since 2:00 PM on January 8; bias since 6:00 PM on December 25 is up; higher highs and higher lows since then
  • RSI-9 declining from above 65 to below 50
  • At/above 20-BAR EMA, which is above EMA10 of EMA50
  • Bias: Side
30-Minute (e-mini future)
  • Moving sideways to down since 8:00 PM on January 8, which is more like a round topping pattern;
  • RSI-9 declined from above 65 to below 40
  • Below EMA10 of EMA50, which is below 20-bar EMA
  • Bias: Side
15-Minute (e-mini future)
  • Bollinger Band (20, 2.0) is moving sideways to down since 1:00 AM
  • The band narrowed from 0:45 AM to 3:00 AM; expanding since with price mostly moving along lower band
  • RSI-9 declining from above 65 at 1:00 AM to below 40
  • Stochastic (9, 1, 3): %K crossed below %D from just over 90
  • Bias: Side-Down2

Previous Session

Major U.S. indices closed mostly down on Monday January 14. Dow Jones Transportation Average closed up. The volume was mostly higher than that on Friday but lower than the 10-day average. S&P 500 traded in lower volume.


The S&P 500 lost 0.5% on Monday, pulling back from a three-week winning streak. The benchmark index never traded in positive territory but it did cut its intraday losses in half. The Dow Jones Industrial Average (-0.4%) also finished off its low. The Nasdaq Composite (-0.9%) and the Russell 2000 (-1.0%) did, too, yet they did not fare as well overall.

The S&P 500 utilities (-2.3%), health care (-1.2%), and information technology (-0.9%) sectors weighed on the broader market. Conversely, the financials (+0.7%) sector helped offset losses and it was the only sector to finish in positive territory.


U.S. Treasuries finished mixed with the 2-yr yield decreasing three basis points to 2.52% and the 10-yr yield adding one basis point to 2.71% in a curve-steepening trade. The U.S. Dollar Index lost 0.1% to 95.59. WTI crude lost 2.1% to $50.58/bbl.

  • S&P 500 Sectors
Sector Daily Trend (Visual) Relative Strength (Last Month – December) Relative Strength (January) %K vs. %D (January)
Consumer Discretionary Down XLY (X-Over) XLY Cross-Over
Consumer Staples Down XLP SPY (Cross-Under) Below
Energy Down SPY XLE (Cross-Over) Cross-Over
Materials Down XLB XLB Cross-Over
Industrials Down SPY (X-Under) XLI (Cross-Over) Cross-Over
Finance Down SPY (X-Under) SPY Cross-Over
Technology Down SPY SPY Below
Utility Under Pressure SPY (X-Under) SPY Below
Heath Care Down XLV SPY (Cross-Under) Below
Real Estate Down SPY (X-Under) SPY Below
Telecom Down SPY XTL (Cross-Over) Cross-Over
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