Morning Notes – Tuesday May 21, 2019

Directional Bias For The Day:

  • S&P Futures are higher; moving up since 3:00 PM on Monday;  fresh leg up since 3:30 AM
  • The odds are for an up day with elevated volatility – watch for break below 2846.25 for change of fortune
  • Trade talks influencing the sentiments
  • Key economic data due
    • Existing Home Sates (5.21M vs. 5.35M est.; 5.21M prev. ) at 10:00 AM

Markets Around The World

  • Markets in the East closed mixed – Shanghai, Sydney and Seoul closed up; Hong Kong Tokyo, Sydney, Mumbai and Singapore were down
  • European markets are higher
  • 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
    • NatGas
    • Gold
    • Silver
    • Palladium
    • Sugar
    • Coffee
    • Cotton
    • Cocoa
  • Bonds
    • 10-yrs yield closed at 2.416%, up from May 17 close of 2.393%;
    • 30-years is at 2.835%, up from 2.824%
    • 2-years yield is at 2.229%, up from 2.200%
    • The 10-Year-&-2-Year spread is at 0.187, down from 0.193

Key Levels:

  • Critical support levels for S&P 500 are 2831.29, 2817.66 and 2815.08
  • Critical resistance levels for S&P 500 are 2865.19, 2875.28 and 2878.55
  • Key levels for eMini futures: break above 2863.00, the high of 6:30 AM and break below 2846.25, the low of 3:00 AM

Pre-Open

  • On Monday, at 4:00 PM, S&P future (June contract) closed at 2841.25 and the index closed at 2840.23 – a spread of about +1.00 points; futures closed at 2844.00 for the day; the fair value is -2.75
  • Pre-NYSE session open, futures are higher – at 8:30 AM, S&P 500 futures were up by +15.00; Dow by +157 and NASDAQ by +46.75

Directional Bias Before Open

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

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 May 17 was a green spinning candle that gapped down at the opne with small real body and almost equal sized upper and lower shadows;
    • Stochastics (9,1, 3): %K is below %D and nearing 30
    • RSI (9) has fallen below 50; made 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 down -21.87 or -0.8% and 5-week ATR is 66.85
  • Last week’s pivot point=2851.04, R1=2900.64, R2=2941.76; S1=2809.92, S2=2760.32; S1 pivot level was breached
  • A down week; third in last five weeks and fourth 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 candle that gapped down at the open with small upper and lower shadows
    • %K crossed below %D near 50
    • Stochastic (70, 1, 3) Pop since February 11 ended on May 9
    • RSI-9 is turning down but above its 8-period MA
    • The sequence of higher highs and higher lows since December 26, 2018 is in danger of breaking; break below 2785.02 will do it
  • Below 20-day EMA; below 50-day EMA, above 100-DAY SMA and 200-day SMA
  • Uptrend under pressure
2-Hour (e-mini future)
  • Rising since 4:00 PM on May 20; declining from a high of 2894.00 at 12:00 PM on May 16 after rising since making a low of 2799.75 at 6:00 PM on May 13; broke above a downtrend line from the high of 2949.50 made at 4:00 PM on May 3 but below the trendline from all time high
    • RSI-9 is rising since 4:00 PM on Monday from below 30; near 60
    • %K is above %D and above 90
  • Above EMA10 of EMA50, which is above 20-bar EMA
  • Bias: Down-Side
30-Minute (e-mini future)
  • Rising since 3:30 PM on Monday after making a double bottom; broke above the intermediate high at 9:30 PM; near the 61.8% target around 2869.00 and the  100% extension target is near 2877.00
    • RSI-21 is rising since 2:30 PM after making a Bullish Divergence; near 60
    • %K is above %D near 90
  • Above 20-bar EMA, which is above EMA10 of EMA50
  • Bias: Side
15-Minute (e-mini future)
  • Bollinger Band (20, 2.0) is moving sideways to up since 8:30 PM
  • The Bollinger Band narrowed from 1:30 AM to 3:15 AM; expanding since with price first walking down the lower band and the walking up the upper band since 5:30 AM
  • Stochastic (9, 1, 3): %K is crisscrossing %D higher from near 0 at 3:00 AM
  • Bias: Side-Up

Previous Session

Major U.S. indices closed lower on Monday, May 20 in lower volume. Major indices gapped down at the open and then made low for the day in the first half of trading. After rising for next few hours the indices tested the lows again in the last hour before closing near the open for the day. Most indices made doji candle that gapped down with relatively small upper and lower shadow. A break above or below Monday’s highs and lows will give clues for direction over the next few days.

From Briefing.com:

The S&P 500 declined 0.7% on Monday, led lower by the technology stocks. Lingering concerns about Chinese retaliation against U.S. tech companies following U.S. scrutiny of Huawei Technologies dampened general buying interest.

The Dow Jones Industrial Average lost 0.3%, and the Russell 2000 lost 0.7%. The Nasdaq Composite underperformed with a loss of 1.5%.

[…]

The S&P 500 real estate (-1.6%), materials (-1.5%), and communication services (-1.2%) sectors joined the tech sector (-1.8%) as the day’s worst-performers. The utilities (+0.2%), financials (+0.1%), and energy (+0.1%) sectors were the lone sectors to finish higher.

[…]

U.S. Treasuries finished lower despite the negative disposition in equities. The 2-yr yield increased one basis point to 2.22%, and the 10-yr yield increased two basis points to 2.42%. The U.S. Dollar Index declined 0.1% to 97.95. WTI crude increased 0.9% to $63.30/bbl on rising U.S.-Iran tensions and OPEC+ producers signaling that production cuts may last throughout 2019.

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