Directional Bias For The Day:
- S&P Futures are higher; moving mostly sideways since 3:30 PM on Tuesday
- Daily and weekly trends are down
- Odds are for an up day with elevated volatility – watch for break below 2602.50 for change of fortunes
- Key economic data due:
- Import Prices (est. -1.3%; -1.% prev.) at 8:30 AM
- NAHB Housing Market Index (est. 56; 56 prev. ) at 10:00 AM
Markets Around The World
- Markets in the East closed mostly up – Tokyo closed down
- European markets are mostly higher – U.K and Germany are down
- Dollar index
- Crude Oil
- 10-yrs yield is at 2.742%, up from January 15 close of 2.711%;
- 30-years is at 3.103%, up from 3.071%
- 2-years yield is at 2.562%, up from 2.533%
- The 10-Year-&-2-Year spread is at 0.180, up from 0.178
- Critical support levels for S&P 500 are 2593.96, 2578.22 and 2570.41
- Critical resistance levels for S&P 500 are 2613.08, 2635.07 and 2655.51
- Key levels for eMini futures: break above 2617.00, the high of 2:00 AM and break below 2602.50, the low of 8:00 PM on Tuesday
- On Tuesday, at 4:00 PM, S&P future (January contract) closed at 2610.50 and the index closed at 2610.30 – a spread of about +0.25 points; futures closed at 2605.50 for the day; the fair value is +5.00
- Pre-NYSE session open, futures price action is to the upside – at 7:45 AM, S&P 500 futures were up by +6.75; Dow by +92; and NASDAQ by +11.50
Directional Bias Before Open
- Weekly: Down
- Daily: Down
- 120-Min: Side-Up
- 30-Min: Up
- 15-Min: Up-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 mostly higher on Tuesday January 15. Dow Jones Transportation Average closed down. The volume was mostly higher than that on Monday but lower than the 10-day average. Russell 2000 traded in lower volume.
The indices are breaking above a resistance zone near the lows of October 2018. Indices are still in downtrend and below a downtrend line from the all time highs made in early October 2018. NASDAQ Composite and Russell 2000 are approaching their downtrend lines.
The S&P 500 gained 1.1% on Tuesday, as a shift to high-growth stocks helped the market rally past several earnings disappointments. The ability of the market to rally on bad news fed into a belief that the bad news was priced in already during the December rout, which in turn fueled hope that bargain-hunting efforts will keep the 2019 rally try going.
The Dow Jones Industrial Average gained 0.7%, the Nasdaq Composite gained 1.7%, and the Russell 2000 gained 0.9%.
The S&P 500 health care (+1.7%), communication services (+1.7%), and information technology (+1.5%) sectors led the advance. Conversely, the industrials (-0.3%) and material (-0.7%) sectors underperformed.
The bond market was quiet despite the gains in the stock market. The 2-yr yield and 10-yr yield were unchanged at 2.52% and 2.71%. The U.S. Dollar Index rose 0.3% to 95.92. WTI crude rose 2.6% to $51.92/bbl.
• The Producer Price Index for final demand declined 0.2% (Briefing.com consensus -0.1%) while the index for final demand, less food and energy, declined 0.1% (Briefing.com consensus +0.2%). The monthly changes left the index for final demand up 2.5% year-over-year, unchanged from November, and the index for final demand, less food and energy, up 2.7%, also unchanged from November.
o The key takeaway from this report is that producer price inflation is moderating, which will suggest in the market’s mind that consumer price inflation is going to as well.
• The Empire State Manufacturing Survey General Business Conditions Index fell to 3.9 in January (Briefing.com consensus 12.2) from 11.5 in December, led by a deceleration in new orders, inventories, and the number of employees. The six-month outlook also dropped, falling to 17.8 from 30.6.
o The key takeaway from the report is that it fits the view that there is a slowdown in manufacturing activity, which has piqued concerns about a broader slowdown in economic activity unfolding in 2019.
- 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|
|Industrials||Down||SPY (X-Under)||XLI (Cross-Over)||Cross-Over|
|Finance||Down||SPY (X-Under)||XLF (Cross-Over)||Cross-Over|
|Utility||Under Pressure||SPY (X-Under)||SPY||Below|
|Heath Care||Down||XLV||SPY (Cross-Under)||Below|
|Real Estate||Down||SPY (X-Under)||SPY||Below|