Morning Notes – Tuesday January 29, 2019

Directional Bias For The Day:

  • S&P Futures are higher; moving higher since 8:30 PM on Monday in steps
  • Daily and weekly trends are down
  • Odds are for an up day with elevated volatility – watch for break below 2637.50 for change of fortunes
  • Key economic data due:
    • S&P/Case-Shiller Composite-20 HPI (est. 5.0%; prev. 5.0%) at 9:00 AM
    • CB Consumer Confidence (est. 125; prev. 128.1) at 10:00 AM

Markets Around The World

  • Markets in the East closed mostly lower – Tokyo and Seoul were up
  • European markets are higher
  • Currencies:
    Up Down
    • Dollar index
    • EUR/USD
    • GBP/USD
    • USD/JPY
    • USD/CHF
    • NZD/USD
    • USD/CAD
    • USD/INR
    • AUD/USD
  • Commodities:
    Up Down
    • Crude Oil
    • NatGas
    • Gold
    • Silver
    • Copper
    • Platinum
    • Palladium
    • Coffee
    • Cotton
    • Cocoa
    • Sugar
  • Bonds
    • 10-yrs yield is at 2.741%, down from January 28 close of 2.744%;
    • 30-years is at 3.068%, up from 3.061%
    • 2-years yield is at 2.585%, down from 2.595%
    • The 10-Year-&-2-Year spread is at 0.156, up from 0.149

Key Levels:

  • Critical support levels for S&P 500 are 2634.21, 2624.06 and 2612.86
  • Critical resistance levels for S&P 500 are 2644.97, 2658.75 and 2669.12
  • Key levels for eMini futures: break above 2647.75, the low of 3:30 AM on January 28 and break below 2637.50, the low of 6:00 AM

Pre-Open

  • On Monday, at 4:00 PM, S&P future (January contract) closed at 2642.75 and the index closed at 2643.85 – a spread of about -1.00 points; futures closed at 2642.00 for the day; the fair value is +0.75
  • Pre-NYSE session open, futures price action is to the upside – at 7:45 AM, S&P 500 futures were up by +2.50; Dow by +55; and NASDAQ by +10.00

Directional Bias Before Open

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

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

Monthly
  • 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
Weekly:
  • The week ending on January 25 was a small green candle with long lower shadow and small upper shadow; the high was below previous week’s high and week’s low reached near previous week’s middle; approaching the downtrend line, which may act as a resistance
    • Stochastics (9,1, 3) and RSI (14) moving up – %K is above %D; RSI is moving up and is near 50
    • The index is nearing the 61.8% retracement 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 down -5.95 or -0.2% and ATR is 59.52
  • Last week’s pivot point=2650.00, R1=2687.14, R2=2709.52; S1=2627.62, S2=2590.48; no pivot levels were breached;
  • A down week; first after four up weeks; first 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
Daily
  • A small red candle that gapped down at the open; no upper shadow and relatively long lower shadow; made day’s low by 12:00 PM and then drifted higher; just below the downtrend line from October 2018 high
    • %K again crossed below %D after rising above 80;
    • RSI-14 is turned down from near 60; failure swing top and a break below 55.94 will be critical
    • Sequence of lower highs and lower lows since October 3, 2018
  • Above 20-day EMA and 50-day EMA, below 100-day SMA and 200-day SMA
  • Downtrend Paused
2-Hour (e-mini future)
  • Moving mostly sideways since 2:00 PM on January 17; making a rounding pattern at the high since 4:00 PM on January 18; the high January 25 was very near the high on January 18 – almost like a double top;
  • RSI-9 rising from a low of 22.3 at 10:00 AM on January 28; a failure swing bottom
  • At/below 20-bar EMA; below EMA10 of EMA50
  • Bias: Side
30-Minute (e-mini future)
  • Drifting lower since 12:00 PM on January 25; rising since 12:00 PM on January 28; breaking above a downtrend line
  • RSI-9 rising from below 15 at 9:30 AM on January 28; near 65
  • Above EMA10 of EMA50, which is above 20-bar EMA
  • Bias: Down-Side
15-Minute (e-mini future)
  • Bollinger Band (20, 2.0) is moving up since 11:45 PM on Monday
  • The band was slightly narrow from 1:30 PM to 00:30 AM; expanded since; price mostly moving around the upper band
  • RSI-9 is generally moving up since 10:00 AM on Monday from a low of 12.45; above 40 since 8:15 PM; near 65
  • Stochastic (9, 1, 3): %K is above %D since 6:15 AM
  • Bias: Down-Side

Previous Session

Major U.S. indices closed lower on Monday January 28 in lower volume. Most indices gapped down at the open and in the process made 3-day ‘Abandoned Baby Top‘ candlestick formation, which is bearish in nature.

From Briefing.com:

The S&P 500 declined as much as 1.5% on Monday, as warnings from Caterpillar (CAT 124.37, -12.49, -9.1%) and NVIDIA (NVDA 138.01, -22.14, -13.8%) catalyzed early selling efforts. The benchmark index, however, ended the day down 0.8% and finished near its best levels of the session.

The Dow Jones Industrial Average lost 0.8%, the Nasdaq Composite lost 1.1%, and the Russell 2000 lost 0.6%.

The S&P 500 information technology (-1.4%), communication services (-1.2%), and health care (-1.1%) sectors underperformed the broader market. Conversely, the real estate (+1.0%) and consumer staples (+0.5%) sectors were the lone groups to finish in the green.

[…]

  • 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) XLF (Cross-Over) Cross-Over
Technology Down SPY SPY Cross-Over
Utility Under Pressure SPY (X-Under) SPY Below
Heath Care Down XLV SPY (Cross-Under) Below
Real Estate Down SPY (X-Under) XLRE (Cross-Over) Cross-Over
Telecom Down SPY XTL (Cross-Over) Cross-Over
Print Friendly, PDF & Email