Morning Notes – Thursday May 9, 2019

Directional Bias For The Day:

  • S&P Futures are lower; fresh leg down since 7:00 AM
  • The odds are for a down day with elevated volatility – watch for break above 2870.50 for change of fortune
  • China trade and tariff news is still impacting the sentiments
  • Key economic data due:
    • PPI (0.2% vs. 0.2% est.; prev. 0.6%) at 8:30 AM
    • Core PPI ((0.1% vs. 0.2% est.; prev. 0.3%) at 8:30 AM
    • Trade Balance (-50.0B vs. -51.4B est.; -49.3B) at 8:30 AM
    • Unemployment Claims ( 228K vs. 215K est.; prev. 230K) at 8:30 AM

Markets Around The World

  • Markets in the East closed mostly down – Sydney was up
  • European markets are lower
  • Currencies:
    Up Down
    • USD/CAD
    • USD/INR
    • Dollar index
    • EUR/USD
    • GBP/USD
    • USD/JPY
    • USD/CHF
    • AUD/USD
    • NZD/USD
  • Commodities:
    Up Down
    • Gold
    • Sugar
    • Coffee
    • Cocoa
    • Crude Oil
    • NatGas
    • Silver
    • Copper
    • Platinum
    • Palladium
    • Cotton
  • Bonds
    • 10-yrs yield is at 2.442%, down from May 8 close of 2.482%;
    • 30-years is at 2.864%, down from 2.889%
    • 2-years yield is at 2.254%, down from 2.307%
    • The 10-Year-&-2-Year spread is at 0.188, up from 0.175

Key Levels:

  • Critical support levels for S&P 500 are 2858,75, 2848.63 and 2836.03
  • Critical resistance levels for S&P 500 are 2878.94, 2896.41 and 2895.07
  • Key levels for eMini futures: break above 2870.50, the high of 7:00 AM and break below 2844.75, the low of March 31

Pre-Open

  • On Wednesday, at 4:00 PM, S&P future (June contract) closed at 2880.25 and the index closed at 2879.42 – a spread of about +1.25 points; futures closed at 2887.25 for the day; the fair value is -7.00
  • Pre-NYSE session open, futures are lower – at 8:30 AM, S&P 500 futures were down by -25.75; Dow by -208 and NASDAQ by -86.50

Directional Bias Before Open

  • Weekly: Uptrend
  • Daily: Uptrend under pressure
  • 120-Min: Down
  • 30-Min: Down
  • 15-Min: Down
  • 6-Min: Down

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

Monthly
  • Under Pressure
  • March 2019 was a green spinning top candle with lower shadow larger than the upper shadow
  • Third up month in a row
  • Sequence of higher highs and higher lows since February 2016 is broken
Weekly:
  • The week ending on Mar 3 was a small green spinning top with small upper shadow and long lower shadow; the index made all time closing and intraday highs
    • Stochastics (9,1, 3) is above 90 but %K is crossing below %D;
    • RSI (9) is above 71; potential of making a Bearish Divergence vis-à-vis October 2018 high when the RSI was above 75 and January 2018 high when it was above 90
    • The index has broken above the 78.6% Fibonacci retracement of the decline from the high in early October 2018
  • Last week was up +5.76 or +0.2% and 5-week ATR is 43.86
  • Last week’s pivot point=2933.42, R1=2966.35, R2=2987.05; S1=2912.72, S2=2879.79; S1 pivot level was breached
  • An up week; fourth in last five weeks and seventh in last ten weeks
  • Last swing low, 2532.69, was the low on February 5, 2018 and breached in December 2018, when a lower swing low of 2346,58; since then the high of 2815.15 is breached but the all time high is not
  • Above 10-week EMA and 39-week SMA; above 89-week SMA
  • Uptrend
Daily
  • A small doji like red candle with small lower shadow and long upper shadow
    • %K is below %D and near 20; %K made a Bearish Divergence on April 30
    • Stochastic (70, 1, 3) Pop since February 11
    • RSI-9 is declining since April 30 from 77.81 after making a Bearish Divergence; below 40
    • The sequence of higher highs and higher lows since December 26, 2018
  • Below 20-day EMA; above 50-day EMA, 100-DAY SMA and 200-day SMA
  • Uptrend under pressure
2-Hour (e-mini future)
  • Declining since 10:00 PM on April 30 in steps; lower highs and lower lows since April 30
    • RSI-9 moving down and is near 30
    • %K is below %D and near 30
  • Below 20-bar EMA, which is below EMA10 of EMA50
  • Bias: Down
30-Minute (e-mini future)
  • Moving down since 3:00 PM on Wednesday
    • RSI-21 has declined below 40 after moving along for many bars
    • %K is below %D and near 10
  • Below EMA10 of EMA50, which is below 20-bar EMA
  • Bias: Down
15-Minute (e-mini future)
  • Bollinger Band (20, 2.0) is moving down since 6:45 PM
  • The Bollinger Band was narrow from 1:45 AM to 2:45 AM; expanding since with price walking down the lower band
  • Stochastic (9, 1, 3): %K is crisscrossing %D down; near 20
  • Bias: Down

Previous Session

Major U.S. indices closed mostly lower on Wednesday, May 8 in lower volume. Most indices made doji or doji like candlesticks. Dow Jones Industrial Average closed higher.

From Briefing.com:

The S&P 500 declined 0.2% on Wednesday, as investors remained cautious about a U.S.-China trade deal. The benchmark index was on pace to end a two-day slide, being up as much as 0.5% on optimism that a trade deal may still get done, but the recovery attempt faded in last 30 minutes of trading.

The Nasdaq Composite lost 0.3%, and the Russell 2000 lost 0.5%. The Dow Jones Industrial Average (unch) managed to finish unchanged.

[…]

The report raises uncertainty about when, if it all, a deal might get done with the tariff rate on $200 billion of Chinese imports set to increase on Friday. Nevertheless, the stock market traded with modest, but broad-based, gains during the afternoon before selling off into the close.

Most of the S&P 500 sectors finished little changed. The utilities (-1.4%) and communication services (-0.4%) sectors underperformed, while the health care (+0.1%) and real estate (+0.1%) sectors outperformed.

[…]

U.S. Treasuries lost steam, sending yields higher, as equities gained traction during the day. The 2-yr yield increased two basis points to 2.30%, and the 10-yr yield increased three basis points to 2.48%. The U.S. Dollar Index held firm, finishing unchanged at 97.62. WTI crude rose 1.2% to $62.12/bbl following bullish inventory data out of the Energy Information Administration.

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