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

Pre-Open

  • 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:

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 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
Daily
  • 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.

From Briefing.com:

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

Morning Notes – Monday January 14, 2019

Directional Bias For The Day:

  • S&P Futures are lower; moving sideways since 9:00 PM n Sunday
  • Daily and weekly trends are down
  • Odds are for a sideways to down day with elevated volatility (sideways from pre-NYSE open level and down from last close)  – watch for break above 2578.25 and break below 2567.25 for more clarity
  • No key economic data due

Markets Around The World

  • Markets in the East closed down – Tokyo was close
  • European markets are lower
  • Currencies:
    Up Down
    • Dollar index
    • EUR/USD
    • USD/JPY
    • USD/CHF
    • AUD/USD
    • NZD/USD
    • GBP/USD
    • USD/CAD
    • USD/INR
  • Commodities:
    Up Down
    • NatGas
    • Gold
    • Palladium
    • Cotton
    • Crude Oil
    • Silver
    • Copper
    • Platinum
    • Sugar
    • Coffee
    • Cocoa
  • Bonds
    • 10-yrs yield is at 2.692%, down from January 11 close of 2.701%;
    • 30-years is at 3.033%, down from 3.037%
    • 2-years yield is at 2.541%, down from 2.549%
    • The 10-Year-&-2-Year spread is at 0.151, down from 0.152

Key Levels:

  • Critical support levels for S&P 500 are 2577.79, 2573.51 and 2568.89
  • Critical resistance levels for S&P 500 are 2597.82, 2600.91 and 2619.04
  • Key levels for eMini futures: break above 2577.25, the high of 7:30 AM and break below 2567.25, the low of 5:00 AM

Pre-Open

  • On Friday, at 4:00 PM, S&P future (January contract) closed at 2596.25 and the index closed at 2596.26 – a spread of about +0.00 points; futures closed at 2595.00 for the day; the fair value is +1.25
  • Pre-NYSE session open, futures price action is to the downside – at 9:00 AM, S&P 500 futures were down by -20.25; Dow by -194; and NASDAQ by -63.75

Directional Bias Before Open

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

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 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
Daily
  • A small green candle within the body of a larger green candle, which was a bullish engulfing candle; 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 above %D over 90;
    • RSI-14 is 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 rose from below 40 at 2:00 PAM on January 10 to above 65 by 2:00 PM; declined to below 40 by 8:00 PM on Sunday; now above 40
  • At/above EMA10 of EMA50, which is below 20-bar EMA
  • 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 is moving around 40 since 6:30 PM on January 13
  • At/below 20-bar EMA, which is below EMA10 of EMA50
  • Bias: Side-Down
15-Minute (e-mini future)
  • Bollinger Band (20, 2.0) is moving sideways since 1:30 AM after moving down from 9:15 PM on Sunday
  • The band narrowed from 1:30 AM to 4:30 AM; expanding since; price briefly moved along lower band and are now approaching the upper band
  • RSI-9 is mostly moving up from below 30 since 10:00 PM on Sunday and made few bearish divergences; above 50
  • Stochastic (9, 1, 3): %K crossed above  %D near 50
  • Bias: Down-Side

Previous Session

Major U.S. indices closed mixed on Friday January 11. S&P 500, Dow Jones Industrial Average and NASDAQ Composite closed down. Dow Jones Transportation Average, Russell 2000, NYSE Composite and Wilshire 5000 Total Market Index closed higher. The volume was lower than that on Thursday and the 10-day average.

For the week, the major indices closed higher. The volume was mixed than previous week, which was only four-day week. S&P 500, NASDAQ Composite traded in lower volume. All S&P sectors closed higher.

From Briefing.com:

The S&P 500 gained 2.5% this week, rising for the third straight week and extending its rally to x% since its Christmas Eve low. The Dow Jones Industrial Average gained 2.4%, the Nasdaq Composite gained 3.5%, and the Russell 2000 gained 4.8%.

All 11 S&P 500 sectors finished higher with industrials (+4.1%), consumer discretionary (+3.7%), real estate (+4.0%), energy (+3.4%), and information technology (+3.4%) outperforming the broader market.

[…]

Separately, the Federal Reserve released its minutes from its December policy meeting. The minutes revealed a view that the path of U.S. monetary policy is “less clear” than before, and a contention that the Fed can “afford to be patient” about future rate hikes.

[…]

U.S. Treasuries lost ground amid the gain in equities, pushing yields higher across the curve. The 2-yr yield increased seven basis points to 2.55%, and the 10-yr yield increased four basis points to 2.70%. The U.S. Dollar Index lost 0.5% to 95.68, and WTI crude rose 7.8% to $51.68/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 Below
Technology Down SPY XLK  (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
Telecom Down SPY XTL (Cross-Over) Cross-Over

Morning Notes – Friday January 11, 2019

Directional Bias For The Day:

  • S&P Futures are lower; moving down since 4:30 AM
  • Daily and weekly trends are down
  • Odds are for a down day with elevated volatility – watch for break above 2590.75 for change of fortune
  • Key economic data due:
    • CPI ( -0.1% vs. -0.1% est.; 0.0% prev.) at 8:30 AM
    • Core CPI ( 0.2% vs. 0.2% est.; 0.2% prev.) at 8:30 AM

Markets Around The World

  • Markets in the East closed mostly higher – Sydney and Mumbai Seoul closed down;
  • European markets are mostly lower – Switzerland is up
  • Currencies:
    Up Down
    • Dollar index
    • GBP/USD
    • AUD/USD
    • NZD/USD
    • USD/CAD
    • USD/INR
    • EUR/USD
    • USD/JPY
    • USD/CHF
  • Commodities:
    Up Down
    • NatGas
    • Gold
    • Copper
    • Palladium
    • Sugar
    • Cotton
    • Crude Oil
    • Silver
    • Platinum
    • Coffee
    • Cocoa
  • Bonds
    • 10-yrs yield is at 2.697%, down from January 10 close of 2.731%;
    • 30-years is at 3.033%, down from 3.051%
    • 2-years yield is at 2.537%, down from 2.578%
    • The 10-Year-&-2-Year spread is at 0.160, up from 0.153

Key Levels:

  • Critical support levels for S&P 500 are 2581.66, 2573.51 and 2568.89
  • Critical resistance levels for S&P 500 are 2597.82, 2600.91 and 2619.04
  • Key levels for eMini futures: break above 2590.75, the high of 7:30 AM and break below 2582.50, the low of 8:30 AM

Pre-Open

  • On Thursday, at 4:00 PM, S&P future (January contract) closed at 2596.75 and the index closed at 2596.84 – a spread of about +0.00 points; futures closed at 2594.00 for the day; the fair value is +2.75
  • Pre-NYSE session open, futures price action is to the downside – at 8:45 AM, S&P 500 futures were down by -7.75; Dow by -60; and NASDAQ by -25.25

Directional Bias Before Open

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

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 4 was a green candle with open above previous weeks’ close and the lower shadow reaching nearly the middle of its real body; the three-week morning star pattern is emerging
    • Stochastics (9,1, 3) and RSI (14) moving up – %K is above %D; RSI is moving above 40
    • 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 +46.20 or +1.9% and ATR is 94.11
  • Last week’s pivot point=2504.66, R1=2565.35, R2=2598.77; S1=2471.24, S2=2410.55; No pivot levels were breached;
  • An up week; second in last five weeks and fourth 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 bullish engulfing candle with small lower and smaller upper shadows; 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 crossed above %D over 90;
    • RSI-14 is 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 rose from below 40 at 2:00 PAM on January 10 to above 65 by 2:00 PM; declined to just below 50
  • At/above 20-bar EMA, which is above EMA10 of EMA50
  • Bias: Side-Up
30-Minute (e-mini future)
  • Moving sideways since 8:00 PM on January 8; forming a cup-with-handle pattern since 1:00 PM on January 9; break above 2597.75 will complete the pattern and break below 2573 will nullify it
  • RSI-9 is declining since making a high of 69.66 at 12:30 PM on January 10; a bearish divergence at 3:30 PM; below 40
  • At/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 4:00 PM on January 10
  • The band narrowed from 9:15 PM to 3:15 AM; expanding since with price moving along the lower band
  • RSI-9 is mostly moving down since 11:00 AM on Thursday and made few bearish divergences
  • Stochastic (9, 1, 3): %K is crisscrossing %D near 20
  • Bias: Side-Down

Previous Session

Major U.S. indices closed higher on Thursday January 10. Market started the day down but the turned around closed higher. The volume was mixed and mostly lower than the 10-day average. Dow Jones Industrial Average, Dow Jones Transportation Average and S&P 500 traded in higher volume. Major indices are above 20-day EMA and are nearing a resistance at a prior support level created by the lows created in October 2018.

From Briefing.com:

The S&P 500 gained 0.5% on Thursday, extending its winning streak to five straight sessions. The Dow Jones Industrial Average gained 0.5%, the Nasdaq Composite gained 0.4%, and the Russell 2000 gained 0.5%.
10 of the 11 S&P 500 sectors finished higher with real estate (+1.6%), utilities (+1.4%), and industrials (+1.4%) leading the advance. Conversely, the consumer discretionary sector (-0.2%) underperformed.

[…]

The S&P 500 lost as much as 0.9% shortly after the start of trading amid a prevailing sense that the broader market may have gotten overbought on a short-term basis. Entering the session, the benchmark index was up 10% from its Christmas eve low.

[…]

True to recent form, the S&P 500 climbed back into positive territory and closed near its session high, which was just below the 2600 level.

[…]

• Initial claims decreased by 17,000 to 216,000 (Briefing.com consensus 225,000) for the week ending January 5. Continuing claims for the week ending December 29 decreased by 28,000 to 1.722 million.
o The key takeaway from the report is that it fits neatly with the market’s latest awareness that the labor market has held up fine despite the burgeoning concerns about the economy slowing.

  • 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 Below
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) SPY Below
Telecom Down SPY XTL (Cross-Over) Cross-Over

Morning Notes – Thursday January 10, 2019

Directional Bias For The Day:

  • S&P Futures are lower; moving sideways since 8:30 PM on Wednesday
  • Daily and weekly trends are down
  • Odds are for a sideways to down day (from pre-open level) with elevated volatility – watch for break above 2574.25 and break below 2565.25 for clarity
  • Key economic data due:
    • Unemployment Claims (216K vs. 226k est.; 233K prev.) at 8:30 AM

Markets Around The World

  • Markets in the East closed mixed – Shanghai, Tokyo, Mumbai and Seoul closed down; Hong Kong, Sydney and Singapore closed up
  • European markets are mostly lower – Spain and Switzerland are up
  • Currencies:
    Up Down
    • Dollar index
    • USD/CHF
    • AUD/USD
    • NZD/USD
    • USD/CAD
    • EUR/USD
    • GBP/USD
    • USD/JPY
    • USD/INR
  • Commodities:
    Up Down
    • NatGas
    • Gold (Unch.)
    • Platinum
    • Palladium
    • Cocoa
    • Crude Oil
    • Silver
    • Copper
    • Sugar
    • Coffee
    • Cotton
  • Bonds
    • 10-yrs yield is at 2.712%, down from January 9 close of 2.728%;
    • 30-years is at 3.022%, down from 3.024%
    • 2-years yield is at 2.533%, down from 2.521%
    • The 10-Year-&-2-Year spread is at 0.179, up from 0.207

Key Levels:

  • Critical support levels for S&P 500 are 2568.89, 2554.71 and 2546.76
  • Critical resistance levels for S&P 500 are 2595.32, 2600.91 and 2619.04
  • Key levels for eMini futures: break above 2574.50, the high of 11:30 PM on January 9 break below 2565.25, the low of 5:30 AM

Pre-Open

  • On Wednesday, at 4:00 PM, S&P future (January contract) closed at 2586.25 and the index closed at 2584.96 – a spread of about +1.00 points; futures closed at 2582.50 for the day; the fair value is +3.75
  • Pre-NYSE session open, futures price action is to the downside – at 8:45 AM, S&P 500 futures were down by -13.75; Dow by -91; and NASDAQ by -41.25

Directional Bias Before Open

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

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 4 was a green candle with open above previous weeks’ close and the lower shadow reaching nearly the middle of its real body; the three-week morning star pattern is emerging
    • Stochastics (9,1, 3) and RSI (14) moving up – %K is above %D; RSI is moving above 40
    • 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 +46.20 or +1.9% and ATR is 94.11
  • Last week’s pivot point=2504.66, R1=2565.35, R2=2598.77; S1=2471.24, S2=2410.55; No pivot levels were breached;
  • An up week; second in last five weeks and fourth 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 relatively green spinning top candle; 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 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 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 declined to below 40 since making a high of 79.17 at 10:00 AM on January 7; moving along 40 since 6:00 PM on January 9
  • 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; above a horizontal channel; the 100% extension target near 2588.00 is achieved
  • RSI-9 is rising since making a low of 33.4 at 3:30 AM; a bullish divergence; just above 40
  • At/below 20-bar EMA, which is at/below EMA10 of EMA50
  • Bias: Side
15-Minute (e-mini future)
  • Bollinger Band (20, 2.0) is moving sideways since 0:45 AM after moving down from 3:15 PM on January 9
  • The band was narrow from midnight to 0:45 AM to 2:45 AM; expanded after that; price first moved along the lower band till 3:45 AM and is mostly above the middle point since 4:30 AM;
  • RSI-9 is moving up after a making a low of 28.98, and a bullish divergence, at 3:30 AM; at/above 50
  • Stochastic (9, 1, 3): %K has crossed below %D at 8:15 from above 80 after making a bearish divergence
  • Bias: Down-Side

Previous Session

Major U.S. indices closed higher on Wednesday January 9. Market showed weakness in the later half of the day. The volume was mostly lower  than previous day and also lower than 10-day average. Dow Jones Industrial Average traded in higher volume. Major indices are above 20-day EMA. The indices are facing a resistance at a prior support level created by the lows created in October 2018.

From Briefing.com:

The S&P 500 gained 0.4% on Wednesday, helped by softening trade tensions, easing anxieties over U.S. monetary policy, and rebounding oil prices ($52.20/bbl, +$2.54, +5.1%). The Dow Jones Industrial Average gained 0.4%, the Nasdaq Composite gained 0.9%, and the Russell 2000 gained 0.9%.

[…]

The S&P 500 briefly fell into negative territory (-0.2%) in the early going, but ultimately rebounded before running into some resistance as it approached the 2600 level shortly after the release of the FOMC minutes from the December policy meeting.

[…]

Within the S&P 500, the energy (+1.5%) and information technology (+1.2%) sectors led the broader market higher. Conversely, the defensive-oriented consumer staples (-1.0%), utilities (-0.7%), and real estate (-0.4%) sectors underperformed.

[…]

The U.S. Treasury yield curve steepened a bit on Thursday, undoing the prior session’s flattening. The 2-yr yield decreased four basis points to 2.55%, and the 10-yr yield added one basis point to 2.73%. The U.S. Dollar Index fell 0.8% to 95.13.

  • 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) SPY Cross-Over
Finance Down SPY (X-Under) SPY Below
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

Morning Notes – Wednesday January 9, 2019

Directional Bias For The Day:

  • S&P Futures are higher; moving sideways since 8:00 PM on Tuesday
  • Horizontal channel emerging on 30-minute timeframe – high 2587.25 and low 2575.00
  • Daily and weekly trend is down
  • Odds are for a sideways to down day (from pre-open level) with elevated volatility – watch for break above 2587.25 and break below 2575.00 for clarity
  • Key economic data due:
    • FOMC December Meeting Minutes at 2:00 PM

Markets Around The World

  • Markets in the East closed higher
  • European markets are higher
  • Currencies:
    Up Down
    • EUR/USD
    • GBP/USD
    • USD/JPY
    • AUD/USD
    • NZD/USD
    • USD/INR
    • Dollar index
    • USD/CHF
    • USD/CAD
  • Commodities:
    Up Down
    • Crude Oil
    • Silver
    • Copper
    • Platinum
    • Palladium
    • Sugar
    • Coffee
    • Cotton
    • NatGas
    • Gold
    • Cocoa
  • Bonds
    • 10-yrs yield is at 2.750%, up from January 8 close of 2.716%;
    • 30-years is at 3.030%, up from 2.993%
    • 2-years yield is at 2.602%, up from 2.541%
    • The 10-Year-&-2-Year spread is at 0.148, up from 0.126

Key Levels:

  • Critical support levels for S&P 500 are 2554.71, 2546.76 and 2522.13
  • Critical resistance levels for S&P 500 are 2579.82, 2585.29 and 2600.91
  • Key levels for eMini futures: break above 2587.25, the high of 9:30 AM and break below 2575.00, the low of 7:00 AM

Pre-Open

  • On Tuesday, at 4:00 PM, S&P future (January contract) closed at 2574.50 and the index closed at 2574.41 – a spread of about +0.00 points; futures closed at 2572.50 for the day; the fair value is +2.00
  • Pre-NYSE session open, futures price action is to the upside – at 8:30 AM, S&P 500 futures were up by +10.75; Dow by +117; and NASDAQ by +35.25

Directional Bias Before Open

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

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 4 was a green candle with open above previous weeks’ close and the lower shadow reaching nearly the middle of its real body; the three-week morning star pattern is emerging
    • Stochastics (9,1, 3) and RSI (14) moving up – %K is above %D; RSI is moving above 40
    • 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 +46.20 or +1.9% and ATR is 94.11
  • Last week’s pivot point=2504.66, R1=2565.35, R2=2598.77; S1=2471.24, S2=2410.55; No pivot levels were breached;
  • An up week; second in last five weeks and fourth 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 relatively small green candle with small upper shadow and long lower shadow
    • 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 above %D and above 90;
    • RSI-14 is above 50
    • Sequence of lower highs and lower lows since October 3, 2018
  • At/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 up since 6:00 PM on January 3; the bias since 6:00 PM on December 25 is up; higher highs and higher lows since then
  • RSI-9 is mostly declining since making a high of 79.17 at 10:00 AM on January 7; made couple of bearish divergences; below 60
  • Above 20-bar EMA, which is above EMA10 of EMA50
  • Bias: Side-Up
30-Minute (e-mini future)
  • Moving sideways since 8:00 PM on January 8; above a horizontal channel; the 100% extension target near 2588.00 is achieved
  • RSI-9 is declining since midnight from a high of 66.09; made few bearish divergences; below 50
  • At/below 20-bar EMA, which is above EMA10 of EMA50
  • Bias: Up-Side
15-Minute (e-mini future)
  • Bollinger Band (20, 2.0) is drifting sideways to down since 9:30 PM on January 8
  • The band was narrow from midnight to 1:30 AM; expanded slightly after that
  • RSI-9 is moving down from a high of 71.24 at 9:30 PM after making a bearish divergence; below 40
  • Stochastic (9, 1, 3): %K is crisscrossing %D down since 4:30 AM; bouncing off from zero at 6:15 AM
  • Bias: Up-Side

Previous Session

Major U.S. indices closed higher on Tuesday January 8. The volume was mostly lower  than previous day and also lower than 10-day average. Dow Jones Transportation Average traded in higher volume. Major indices are above 20-day EMA. All S&P were up for the day.

From Briefing.com:

The S&P 500 rose 1.0% on Tuesday, notching its third straight day of gains and its fifth in the last six sessions. The benchmark index did succumb to some early selling pressure, though, surrendering an early 1.2% gain. However, the wave of improved investor sentiment — and a buy-the-dip mentality — that has supported the stock market rally thus far in the new year lifted stocks from early lows.

The Dow Jones Industrial Average gained 1.1%, the Nasdaq Composite gained 1.1%, and the Russell 2000 gained 1.5%.

[…]

Buying interest was largely broad-based with 10 of the 11 S&P 500 sectors finishing with gains. The real estate (+1.8%), communication services (+1.6%), industrials (+1.4%), and utilities (+1.3%) groups outperformed the broader market.

[…]

The 2-yr Treasury note yield rose seven basis points to 2.59%, and the 10-yr Treasury note yield rose three basis points to 2.72%. The U.S. Dollar Index increased by 0.3% to 95.92.

[…]

• The NFIB Small Business Optimism Index for December decreased to 104.4 from the prior reading of 104.8 in November
• The November Job Openings and Labor Turnover Survey showed that job openings decreased to 6.888 million from a revised 7.131 million (from 7.079 million) in October
• Total outstanding consumer credit increased by $22.2 billion in November after increasing a downwardly revised $24.9 billion (from $25.4 billion) in October.
o The key takeaway from the report is that the healthy expansion in consumer credit is a good portent for consumer spending activity when matched with good feelings about job security and income growth.

[…]

  • 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) SPY 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