Morning Notes – Friday June 21, 2019

Directional Bias For The Day:

  • S&P Futures are lower; moving sideways to down since 8:30 AM on Thursday
  • The odds are for a sideways to down day – watch for break above 2960.00 and break below 2951.75 for clarity
  • Key economic data due:
    • Flash Manufacturing PMI ( 50.1 vs. 50.5 est. ; prev. 50.5) at 9:45 AM

Markets Around The World

  • Markets in the East closed mostly down – Shanghai and Singapore closed up
  • European markets are mostly lower – Spain and Italy are p
  • Currencies:
    Up Down
    • Dollar index
    • EUR/USD
    • USD/JPY
    • USD/CHF
    • USD/CAD
    • USD/INR
    • GBP/USD
    • AUD/USD
    • NZD/USD
  • Commodities:
    Up Down
    • Crude Oil
    • NatGas (Unch.)
    • Palladium
    • Cotton
    • Cocoa
    • Gold
    • Silver
    • Copper
    • Platinum
    • Sugar
    • Coffee
  • Bonds
    • 10-yrs yield is at 2.059%, up from June 20 close of 2.001%;
    • 30-years is at 2.567%, up from 2.527%
    • 2-years yield is at 1.795%, up from 1.785%
    • The 10-Year-&-2-Year spread is at 0.264, down from 0.217

Key Levels:

  • Critical support levels for S&P 500 are 2946.87, 2937.67 and 231.50
  • Critical resistance levels for S&P 500 are 2958.06, 2961.62 and 2973.12
  • Key levels for eMini futures: break above 2960.00, the high of 3:30 AM and break below 2951.75, the low of 6:00 AM

Pre-Open

  • On Thursday, at 4:00 PM, S&P future (June contract) closed at 2958.50 and the index closed at 2954.18 – a spread of about +4.25 points; futures closed at 2960.00 for the day; the fair value is -1.50
  • Pre-NYSE session open, futures are lower – at 9:00 AM, S&P 500 futures were down by -7.50; Dow by -409 and NASDAQ by -28.00

Directional Bias Before Open

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

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

Monthly
  • Under Pressure
  • May 2019 was a large Bearish Engulfing candle that closed below the real body of April and March and well into March’s lower shadow; April 2019 was a green candle with almost no upper and lower shadows;
  • Sequence of higher highs and higher lows since February 2016 is broken in December since then a new high has been made in May 2019
Weekly:
  • The week ending on June 14 was an almost doji candle with small lower and relatively longer upper shadow following a large bullish engulfing candle with the highest weekly close since the week of May 10
    • Stochastics (9,1, 3): %K is above %D; *=%K above 70
    • RSI (9) is bouncing from just below 40 nearing 60
    • The index bounced off the 89-week SMA during the week of June 7
  • Last week was up +13.64 or +0.5% and 5-week ATR is 37.27
  • Last week’s pivot point=2890.76, R1=2906.83, R2=2926.69; S1=2870.90, S2=2854.83; no pivot levels were breached
  • An up week; second in last five weeks and fifth 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
  • At/below 10-week EMA, above 39-week SMA and 89-week SMA
  • Uptrend under pressure
Daily
  • A small green real bodied candle with small upper shadow and long lower shadow that gapped up at the open
    • %K is above %D above 90
    • RSI-9 is above 70 but below its 8-period MA
    • The sequence of higher highs and higher lows since December 26, 2018 is broken on May 29; the sequence of lower lows and lower highs since May 1 is also broken
  • Above 20-day EMA, 50-day EMA, 100-DAY SMA and 200-day SMA; 100-day SMA crossed is above 200-day SMA after for the first time since January 15 on May 22
  • Uptrend resumed
2-Hour (e-mini future)
  • Moving sideways since 2:00 AM on June 20 near the highs
    • RSI-21 is declining since 6:00 AM on June 20;
    • %K is below %D from above 80
  • Above 20-bar EMA, which is above EMA10 of EMA50
  • Bias: Up-Side
30-Minute (e-mini future)
  • Moving sideways since 3:00 AM on June 20 within a symmetrical triangle near the highs; potential to form a pennant
    • RSI-21 is moving around 50 since 2:30 PM on June 20
    • %K crossed below %D at 5:30 AM
  • At/above 20-bar EMA, which is above EMA10 of EMA50
  • Bias: Side
15-Minute (e-mini future)
  • Bollinger Band (20, 2.0) is drifting sideways to down since 4:45 Pm on June 20
  • The Bollinger Band was relatively narrow from 9:15 PM to 11:00 PM; expanded slightly since with price toggling between upper and lower bands
  • Stochastic (9, 1, 3): %K crisscrossing %D near 30
  • Bias: Side

Previous Session

Major U.S. indices closed mostly higher on Thursday, June 20 in mixed volume. Russell 2000 closed down. Dow Jones Industrial Average and Dow Jones Transportation Average traded in lower volume. S&P 500 made all-time intraday and closing highs. DJIA is close to its highs and NASDAQ Composite and Wilshire 5000 Total Market index are not far from their all time highs. Other has a lot to catch up.

From Briefing.com:

The S&P 500 advanced 1.0% on Thursday, setting a new intraday high and new record close, bolstered by expectations for easier monetary policy and lower sovereign bond yields.

The Dow Jones Industrial Average gained 0.9%, the Nasdaq Composite gained 0.8%, and the Russell 2000 gained 0.5%.

[…]

Expectations for lower rates remained the biggest driver in the equity and bond markets. The 10-yr note yield and the 2-yr note yield declined three basis points each to 1.72% and 2.00%, respectively. The lower yields put some pressure on the U.S. dollar (96.65, -0.47, -0.5%) and continued to favor risk assets.

[…]

The S&P 500 energy sector led all sectors higher with a gain of 2.2%. The other ten sectors finished with gains between 0.4% (health care) and 1.6% (industrials). The turnaround in the S&P 500 financials sector (+0.5%), which was down as much as 0.6% during the day, contributed to the strong finish in the broader market.

[…]

• Initial claims for the week ending June 15 decreased by 6,000 to 216,000 (Briefing.com consensus 220,000). Continuing claims for the week ending June 8 decreased by 37,000 to 1.662 million.
o The key takeaway from the report is that it covers the period in which the survey for the June employment report was conducted. Accordingly, the low level of initial claims should set an expectation for a solid gain in nonfarm payrolls for June.
• The Conference Board’s Leading Economic Index was unchanged in May (Briefing.com consensus +0.1%) following a downwardly revised 0.1% increase (from 0.4%) in April.
o The key takeaway from the report is that it reflects an environment of slower economic growth unfolding in the second quarter. According to the Conference Board, the Leading Economic Index increased 0.3% for the six-month period ending May 2019, versus 2.2% growth during the previous six months.
• The Q1 Current Account Deficit was $130.4 billion (Briefing.com consensus -$125.0 billion) versus a downardly revised $143.9 billion (from -$134.4 billion) for the fourth quarter.
• The Philadelphia Fed Index fell to 0.3 (Briefing.com consensus 11.5) from 16.6 in May.

Morning Notes – Friday June 14, 2019

Directional Bias For The Day:

  • S&P Futures are lower; moving sideways to down since 7:00 AM on Thursday
  • The odds are for a sideways to down day – watch for break above 2898.75 and break below 2881.75 for clarity
  • Key economic data due:
    • Retail Sales ( 0.5% vs. 0.7% est. ; 0.3%) at 8:30 AM
    • Core Retail Sales ( 0.5% vs. 0.5% est. ; 0.5%) at 8:30 AM

Markets Around The World

  • Markets in the East closed mixed – Shanghai, Hong Kong, Mumbai and Seoul closed down; Tokyo, Sydney and Singapore closed up
  • European markets are lower
  • Currencies:
    Up Down
    • Dollar index
    • USD/JPY
    • USD/CHF
    • USD/CAD
    • USD/INR
    • EUR/USD
    • GBP/USD
    • AUD/USD
    • NZD/USD
  • Commodities:
    Up Down
    • Crude Oil
    • NatGas
    • Gold
    • Silver
    • Palladium
    • Sugar
    • Coffee
    • Cocoa
    • Copper
    • Platinum
    • Cotton
  • Bonds
    • 10-yrs yield is at 2.098%, up from June 13 close of 2.091%;
    • 30-years is at 2.597%, up from 2.601%
    • 2-years yield is at 1.875%, up from 1.839%
    • The 10-Year-&-2-Year spread is at 0.223, down from 0.252

Key Levels:

  • Critical support levels for S&P 500 are 2882.01, 2874.68 and 2871.83
  • Critical resistance levels for S&P 500 are 2894.25, 2902.12 and 2910.61
  • Key levels for eMini futures: break above 2890.75, the high of 4:00 AM and break below 2881.75, the low of 6:00 AM

Pre-Open

  • On Thursday, at 4:00 PM, S&P future (June contract) closed at 2893.25 and the index closed at 2891.64 – a spread of about +1.50 points; futures closed at 2894.50 for the day; the fair value is -1.25
  • Pre-NYSE session open, futures are lower – at 9:00 AM, S&P 500 futures were down by -2.00; Dow by -29 and NASDAQ by -16.25

Directional Bias Before Open

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

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

Monthly
  • Under Pressure
  • May 2019 was a large Bearish Engulfing candle that closed below the real body of April and March and well into March’s lower shadow; April 2019 was a green candle with almost no upper and lower shadows;
  • Sequence of higher highs and higher lows since February 2016 is broken in December since then a new high has been made in May 2019
Weekly:
  • The week ending on June 7 was a large green bullish engulfing candle with small lower shadow and smaller upper shadow; made the highest weekly close since the week of May 10
    • Stochastics (9,1, 3): %K crossed above %D;
    • RSI (9) is bouncing from just below 40
    • The index bounced off the 89-week SMA during the week of June 7
  • Last week was up +121.28 or +4.4% and 5-week ATR is 156.16
  • Last week’s pivot point=2829.04, R1=2929.27, R2=2985.20; S1=2773.11, S2=2672.88; R1/R2 pivot levels were breached
  • An up week; first in last five weeks and fifth 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
  • At/below 10-week EMA, above 39-week SMA and 89-week SMA
  • Uptrend under pressure
Daily
  • A small green doji like candle just above the close of previous day; small upper and lower shadows; sideways to down move since June 11
    • %K is crossing above %D above 90
    • RSI-9 is above 50; crossing below its 8-period MA
    • The sequence of higher highs and higher lows since December 26, 2018 is broken on May 29; the sequence of lower lows and lower highs since May 1 is also broken
  • Above 20-day EMA; at/above 50-day EMA; above 100-DAY SMA and 200-day SMA; 100-day SMA crossed is above 200-day SMA after for the first time since January 15 on May 22
  • Uptrend under pressure
2-Hour (e-mini future)
  • Moving within a trading range – between 2874.00 and 2911.50 – since 12:00 PM on June 7; declining from the upper bound since 8:00 PM on Thursday
    • RSI-21 is falling since 8:00 PM on June 13 from near 70; near 40
    • %K is below %D from above 80
  • At/above 20-bar EMA, which is above EMA10 of EMA50
  • Bias: Side
30-Minute (e-mini future)
  • Moving within a horizontal trading range since 10:30 AM on June 7 between 2870.75 and 2905.75
    • RSI-21 is turning up from near 40 at 6:00 AM; mostly moving between 65 and 40 since 3:00 PM on June 6
    • %K crossed above %D at 6:30 AM
  • Below 20-bar EMA, which is at/above EMA10 of EMA50
  • Bias: Side
15-Minute (e-mini future)
  • Bollinger Band (20, 2.0) is moving down since 2:00 AM
  • The Bollinger Band was relatively narrow from 10:00 PM to 2:00 AM; expanding since with price walking down the lower band till 6:30 AM and then bouncing to the upper band
  • Stochastic (9, 1, 3): %K crossed above %D higher
  • Bias: Side

Previous Session

Major U.S. indices closed higher on Thursday, June 13 in mixed volume. Dow Jones Industrial Average and NASDAQ Composite traded in lower volume. The indices have been moving sideways to down since June 11.

From Briefing.com:

The S&P 500 advanced 0.4% on Thursday, lifted by shares of energy companies as oil prices rose after two oil tankers were attacked off the coast of Iran. A swarm of buyers in the last few minutes of action boosted the benchmark index from near session lows to close out the session on a high note.

The Dow Jones Industrial Average increased 0.4%, the Nasdaq Composite increased 0.6%, and the Russell 2000 increased 1.1%.

[…]

The higher oil prices underpinned the leadership in the S&P 500 energy sector (+1.3%). The communication services sector (+1.1%) received a boost from shares of Walt Disney (DIS 141.74, +6.02, +4.4%) after its price target was raised to $160 from $125 at Morgan Stanley. The consumer discretionary sector (+0.9%) also outperformed.

The defensive-oriented sectors — health care (-0.1%), consumer staples (+0.1%), real estate (+0.1%), and utilities (+0.2%) — trailed the pack after outperforming the broader market on Wednesday.

[…]

The 2-yr yield declined seven basis points to 1.82%, and the 10-yr yield declined four basis points to 2.09%. The U.S. Dollar Index increased 0.1% to 97.06.

[…]

• Initial claims for the week ending June 8 hit 222,000 (Briefing.com consensus 220,000), up 3,000 from the prior week’s revised level of 219,000 (revised from 218,000). Continuing claims for the week ending June 1 increased by 2,000 to 1.695 mln from the previous week’s revised level of 1.693 mln (revised from 1.682 mln).
o The key takeaway from the report is that unemployment claims continue pointing to a tight labor market.
• Import prices decreased 0.3% m/m in May after increasing a revised 0.1% (from 0.2%) in April. Excluding fuel, import prices were also down 0.3%. Export prices decreased 0.2% in May after increasing a revised 0.1% (from 0.2%) in April while export prices, excluding agriculture, were also down 0.2% after growing a revised 0.2% (from 0.4%) in April.
o The key takeaway from the report is that the decline in import prices should keep inflation measures at subdued levels.

Morning Notes – Thursday June 13, 2019

Directional Bias For The Day:

  • S&P Futures are higher; moving sideways to up since 4:30 AM
  • The odds are for an up to sideways day – watch for break below 2887.25 for change of fortune
  • Key economic data due:
    • Import Prices ( -0.3% vs. -0.3% est. ; 0.2%) at 8:30 AM
    • Unemployment Claims ( 222K vs. 215K est.; prev. 218K ) at 8:30 AM

Markets Around The World

  • Markets in the East closed mostly lower – Shanghai and Singapore closed up
  • European markets are higher
  • Currencies:
    Up Down
    • Dollar index
    • GBP/USD
    • USD/INR
    • EUR/USD
    • USD/JPY
    • USD/CHF
    • AUD/USD
    • NZD/USD
    • USD/CAD
  • Commodities:
    Up Down
    • Crude Oil
    • Gold
    • Silver
    • Copper
    • Palladium
    • Sugar
    • Cotton
    • NatGas
    • Platinum
    • Coffee
    • Cocoa
  • Bonds
    • 10-yrs yield is at 2.112%, down from June 12 close of 2.127%;
    • 30-years is at 2.610%, down from 2.623%
    • 2-years yield is at 1.893%, down from 1.938%
    • The 10-Year-&-2-Year spread is at 0.219, up from 0.189

Key Levels:

  • Critical support levels for S&P 500 are 2874.68, 2852.787 and 2842.30
  • Critical resistance levels for S&P 500 are 2888..57, 2891.16 and 2902.12
  • Key levels for eMini futures: break above 2894.50, the high of 6:30 AM and break below 2887.25, the low of 8:30 AM

Pre-Open

  • On Wednesday, at 4:00 PM, S&P future (June contract) closed at 2880.75 and the index closed at 2879.84 – a spread of about +1.00 points; futures closed at 2881.00 for the day; the fair value is -0.25
  • Pre-NYSE session open, futures are higher – at 9:00 AM, S&P 500 futures were up by +8.00; Dow by +73 and NASDAQ by +29.50

Directional Bias Before Open

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

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

Monthly
  • Under Pressure
  • May 2019 was a large Bearish Engulfing candle that closed below the real body of April and March and well into March’s lower shadow; April 2019 was a green candle with almost no upper and lower shadows;
  • Sequence of higher highs and higher lows since February 2016 is broken in December since then a new high has been made in May 2019
Weekly:
  • The week ending on June 7 was a large green bullish engulfing candle with small lower shadow and smaller upper shadow; made the highest weekly close since the week of May 10
    • Stochastics (9,1, 3): %K crossed above %D;
    • RSI (9) is bouncing from just below 40
    • The index bounced off the 89-week SMA during the week of June 7
  • Last week was up +121.28 or +4.4% and 5-week ATR is 156.16
  • Last week’s pivot point=2829.04, R1=2929.27, R2=2985.20; S1=2773.11, S2=2672.88; R1/R2 pivot levels were breached
  • An up week; first in last five weeks and fifth 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
  • At/below 10-week EMA, above 39-week SMA and 89-week SMA
  • Uptrend under pressure
Daily
  • A small red doji like candle near the close of previous day; small upper and lower shadows
    • %K is below %D from above 90
    • RSI-9 is above 50 and above its 8-period MA
    • The sequence of higher highs and higher lows since December 26, 2018 is broken on May 29; the sequence of lower lows and lower highs since May 1 is also broken
  • Above 20-day EMA; at/above 50-day EMA; above 100-DAY SMA and 200-day SMA; 100-day SMA crossed is above 200-day SMA after for the first time since January 15 on May 22
  • Uptrend under pressure
2-Hour (e-mini future)
  • Moving sideways to down since 8:00 AM on June 11
    • RSI-21 is rising since 4:00 AM on June 12 from near 30; made Bullish Divergence on June 12
    •  %K is crisscrossing %D higher from below 20; above 80
  • Above 20-bar EMA, which is above EMA10 of EMA50
  • Bias: Up-Side
30-Minute (e-mini future)
  • Moving up since 9:00 PM on Tuesday; broke above a double bottom pattern and an ascending triangle; achieved most of their targets
    • RSI-21 is mostly moving along 65 since 3:00 PM on June 6
    • %K is crisscrossing %D lower
  • Above 20-bar EMA, which is above EMA10 of EMA50
  • Bias: Side-Up
15-Minute (e-mini future)
  • Bollinger Band (20, 2.0) is moving sideways to up sloping up since 6:30 AM on June 12
  • The Bollinger Band was relatively narrow from 2:30 AM to 3:30 AM; expanding slightly since with price first walking up the upper band and then declining to the middle band
  • Stochastic (9, 1, 3): %K is crisscrossing %D higher
  • Bias: Side-Up

Previous Session

Major U.S. indices mostly closed lower on Wednesday, June 12 in lower volume. Dow Jones Transportation Average and Russell 2000 closed up. The day’s range was small and most made doji or small spinning top candles. Three day evening star pattern is emerging on most indices and a close below Wednesday’s low will complete the pattern.

From Briefing.com:

The S&P 500 declined 0.2% on Wednesday in a lackluster session that saw little buying conviction from investors. Shares of energy and financial companies contributed to the lower finish, while defensive-oriented sectors helped limit losses.

The Dow Jones Industrial Average lost 0.2%, and the Nasdaq Composite lost 0.4%. The Russell 2000 (+0.04%) finished just above its flat line.

[…]

There was a bit of a defensive tilt to the session, though, evident by the increased demand for U.S. Treasuries and the outperformance of the defensive-oriented sectors. The S&P 500 utilities (+1.3%), health care (+0.5%), and real estate (+0.3%) sectors were among the day’s best performers.

The S&P 500 energy sector (-1.4%) was Wednesday’s worst-performing group, falling on the back of oil prices ($51.16, -$2.18, -4.1%) amid bearish inventory data. The financials sector (-1.0%) was undercut by lower Treasury yields and by shares of Wells Fargo (WFC 44.91, -1.35, -2.9%) after it warned net interest income for 2019 will be at the low end of prior guidance.

The 2-yr yield declined four basis points to 1.89%, and the 10-yr yield declined one basis point to 2.13%. The U.S. Dollar Index advanced 0.3% to 97.01.

[…]

• Total CPI increased 0.1%, as expected, and so did core CPI, which excludes food and energy prices (Briefing.com consensus +0.2%). The monthly changes left the yr/yr readings at 1.8% and 2.0%, respectively, versus 2.0% and 2.1% for the 12 months ending in April.
o The key takeaway from the report is that consumer inflation pressures remain muted, which in turn is going to reinforce the market’s inflated expectations for the Fed to cut the target range for the fed funds rate sooner rather than later.
• The weekly MBA Mortgage Applications Index soared 26.8% amid a drop in mortgage rates.
• The Treasury Budget for may showed a deficit of $207.8 billion versus a deficit of $146.8 billion for the same period one year ago. The Treasury Budget is not seasonally adjusted, so the May deficit cannot be compared to the $160.3 billion surplus for April.
o The fiscal year-to-date deficit is $738.6 billion versus a deficit of $532.2 billion for the same period ago. The budget deficit over the last 12 months is $985.4 billion, versus $924.4 billion for the 12 months ending in April.
Looking ahead, investors will receive the weekly Initial and Continuing Claims report and Export and Import Prices for May on Thursday.

Morning Notes – Friday June 7, 2019

Directional Bias For The Day:

  • S&P Futures are higher; moving down since 6:45 AM from a high of 2856.75 to just below 2850
  • The odds are for an up to sideways day with elevated volatility – watch for break below 2842.25 for change of fortune
  • Key economic data due:
    • Non-Farm Employment Change ( 75K vs. 177K est. ; prev. 24K) at 8:30 AM
    • Unemployment Rate ( 3.6% vs. 3.6% est.; prev. 3.6% ) at 8:30 AM
    • Average Hourly Earnings ( 0.2% vs. 0.3% est.; prev. 0.2%) at 8:30 AM
    • Final Wholesale Inventories ( est. 0.7%; prev. 0.7%) at 10:00 AM

Markets Around The World

  • Markets in the East closed higher – Shanghai and Hong Kong were closed
  • European markets are higher
  • Currencies:
    Up Down
    • Dollar index
    • GBP/USD
    • USD/JPY
    • USD/CHF
    • NZD/USD
    • USD/INR
    • EUR/USD
    • AUD/USD
    • USD/CAD
  • Commodities:
    Up Down
    • Crude Oil
    • NatGas
    • Gold
    • Silver
    • Copper
    • Platinum
    • Palladium
    • Sugar
    • Coffee
    • Cotton
    • Cocoa
  • Bonds
    • 10-yrs yield is at 2.101%, down from June 6 close of 2.124%;
    • 30-years is at 2.590%, down from 2.622%
    • 2-years yield is at 1.835%, down from 1.855%
    • The 10-Year-&-2-Year spread is at 0.219, down from 0.237

Key Levels:

  • Critical support levels for S&P 500 are 2842.30, 2822.45 and 2815.32
  • Critical resistance levels for S&P 500 are 2852.10, 2863.18 and 2868.75
  • Key levels for eMini futures: break above 2856.25, the high of 7:00 AM and break below 2842.25, the low of 9:00 PM

Pre-Open

  • On Thursday, at 4:00 PM, S&P future (June contract) closed at 2845.00 and the index closed at 2843.49 – a spread of about +1.50 points; futures closed at 2845.75 for the day; the fair value is -0.75
  • Pre-NYSE session open, futures are higher – at 8:15 AM, S&P 500 futures were up by +7.75; Dow by +65 and NASDAQ by +24.75

Directional Bias Before Open

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

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

Monthly
  • Under Pressure
  • May 2019 was a large Bearish Engulfing candle that closed below the real body of April and March and well into March’s lower shadow; April 2019 was a green candle with almost no upper and lower shadows;
  • Sequence of higher highs and higher lows since February 2016 is broken in December since then a new high has been made in May 2019
Weekly:
  • The week ending on May 31 was a large red candle with small upper shadow and almost no lower shadow;
    • Stochastics (9,1, 3): %K is below %D and near 0; %D made Bearish Divergence during the week of April 29
    • RSI (9) has fallen below 40; 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 -74.00 or -2.6% and 5-week ATR is 89.99
  • Last week’s pivot point=2781.03, R1=2811.54, R2=2871.02; S1=2721.55, S2=2691.04; S1/S2 pivot levels were breached
  • A down week; fourth in last five weeks and fifth 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
  • Below 10-week EMA and 39-week SMA; above 89-week SMA
  • Uptrend under pressure
Daily
  • A green candle that gapped at the open and then climbed higher; small upper and long lower shadows
    • %K is above %D from below 10; now above 90
    • RSI-9 is above 50 and above its 8-period MA
    • The sequence of higher highs and higher lows since December 26, 2018 is broken on May 29
  • Above 20-day EMA; at/above 50-day EMA; above 100-DAY SMA and 200-day SMA; 100-day SMA crossed is above 200-day SMA after for the first time since January 15 on May 22
  • Uptrend under pressure
2-Hour (e-mini future)
  • Rising after the gap down weekly open since 2:00 PM on June 3; broke a sequence of lower highs and lower lows since May 16
    • RSI-21 is rising since 2:00 AM on June 3 after making a Bullish Divergence near 25; moving along 75 after reaching a high near 90
    • %K is crisscrossing %D above 90 since higher since 6:00 AM on June 4;
  • Above 20-bar EMA, which is above EMA10 of EMA50
  • Bias: Up
30-Minute (e-mini future)
  • Moving up since 9:00 PM on Tuesday; broke above a double bottom pattern and an ascending triangle; achieved most of their targets
    • RSI-21 is mostly moving along 65 since 3:00 PM on June 6
    • %K is crisscrossing %D higher; above 80
  • Above 20-bar EMA, which is above EMA10 of EMA50
  • Bias: Up
15-Minute (e-mini future)
  • Bollinger Band (20, 2.0) is mostly sloping up since 3:45 AM on June 5
  • The Bollinger Band was relatively narrow from 2:45 AM to 4:00 AM; expanding slightly since with price walking up the upper band
  • Stochastic (9, 1, 3): %K crossed below %D at 7:00 AM from above 80
  • Bias: Up

Previous Session

Major U.S. indices mostly closed higher on Thursday, June 6 in lower volume. Dow Jones Transportation Average and Russell 2000 closed down. Last two days were good follow-through day for most indices after the big gain on Tuesday but the lower volume dampens it impact. The volume has been lower for the last three days. All S&P sectors were up for the day.

From Briefing.com:

The stock market extended its rally to a third consecutive day on Thursday, boosted by news that the U.S. may delay the proposed 5% tariff rate on all imports from Mexico. The 0.6% gain in the S&P 500 lifted the benchmark index nearly 100 points above last Friday’s closing price

[…]

The Dow Jones Industrial Average increased 0.7%, and the Nasdaq Composite increased 0.5%. The Russell 2000 (-0.2%), however, lost ground for the second straight session.

[…]

A turnaround in oil prices ($52.64, +$0.98, +1.9%) padded the rebound in the energy sector (+1.7%), semiconductor stocks boosted the information technology sector (+1.1%), and the trade-sensitive materials sector (+1.1%) also outperformed. The Philadelphia Semiconductor Index advanced 1.3%.

[…]

On a related note, the European Central Bank left its key rates unchanged as was expected, and it expects those rates to remain at their current levels at least through the first half of 2020. The euro advanced 0.5% against the dollar to 1.1272. The U.S. Dollar Index declined 0.3% to 97.06.
Shorter-dated U.S. Treasuries backtracked from yesterday’s advance, pushing the 2-yr yield up five basis points to 1.89%. The 10-yr yield finished unchanged at 2.12% for the second straight day.

[…]

• Initial claims for the week ending June 1 hit 218,000 (Briefing.com consensus 220,000), representing no change from the prior week’s revised level (from 215,000). Continuing claims for the week ending May 25 increased by 20,000 to 1.682 mln.
o The key takeaway from the report is that claims continue reflecting a tight labor market.
• Nonfarm business sector productivity increased 3.4% in the first quarter (Briefing.com consensus 3.4%), according to the revised reading. The initial reading estimated that productivity increased 3.6% in Q1. Unit labor costs decreased 1.6% in the first quarter (Briefing.com consensus -0.8%), down from the initial estimate of a decrease of 0.9%.
o The key takeaway from the report is that the decrease in unit labor costs indicates muted inflationary pressures.
• The trade deficit narrowed to $50.8 bln in April from a revised deficit of $51.9 bln (from $50.0 bln) in March. Exports of $206.8 bln were $4.4 bln below the March level while imports of $208.7 bln were $5.4 bln below the March total.
o The key takeaway from the report is that even with the modest April decrease, the monthly deficit level has not changed much over the past year.

Morning Notes – Thursday June 6, 2019

Directional Bias For The Day:

  • S&P Futures are higher; moving sideways since 3:30 AM after breaking above an ascending triangle
  • The odds are for a sideways to an up day with elevated volatility – watch for break below 2821.75 for change of fortune
  • Key economic data due:
    • Challenger Job Cuts (85.9%; prev. 10.9%) at 7:30 AM
    • Revised Nonfarm Productivity ( est. 3.6%; prev. 3.6%) at 8:30 AM
    • Revised Unit Labor Costs ( est. -0.9%; prev. -0.9%) at 8:30 AM
    • Trade Balance ( est. -50.5B; prev. -50.0B) at 8:30 AM
    • Unemployment Claims ( est. 215K; prev. 215K) at 8:30 AM

Markets Around The World

  • Markets in the East closed mixed – Hong Kong, Sydney Singapore were up; Shanghai, Tokyo and Mumbai were down; Seoul was closed
  • European markets are higher
  • Currencies:
    Up Down
    • EUR/USD
    • GBP/USD
    • USD/CHF
    • AUD/USD
    • NZD/USD
    • Dollar index
    • USD/JPY
    • USD/CAD
    • USD/INR
  • Commodities:
    Up Down
    • Crude Oil
    • Gold
    • Silver
    • Copper
    • Platinum
    • Palladium
    • Sugar
    • Coffee
    • NatGas
    • Cotton
    • Cocoa
  • Bonds
    • 10-yrs yield is at 2.104%, down from June 5 close of 2.123%;
    • 30-years is at 2.607%, down from 2.633%
    • 2-years yield is at 1.835%, down from 1.855%
    • The 10-Year-&-2-Year spread is at 0.269, up from 0.268

Key Levels:

  • Critical support levels for S&P 500 are 2815.32, 2800.92 and 2791.09
  • Critical resistance levels for S&P 500 are 2841.36, 2851.11 and 2863.18
  • Key levels for eMini futures: break above 2838.00, the high of 5:30 AM and break below 2821.71, the low of 1:30 AM

Pre-Open

  • On Wednesday, at 4:00 PM, S&P future (June contract) closed at 2827.25 and the index closed at 2826.15 – a spread of about +1.00 points; futures closed at 2827.75 for the day; the fair value is -0.50
  • Pre-NYSE session open, futures are higher – at 7:15 AM, S&P 500 futures were up by +9.25; Dow by +82 and NASDAQ by +29.25

Directional Bias Before Open

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

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

Monthly
  • Under Pressure
  • May 2019 was a large Bearish Engulfing candle that closed below the real body of April and March and well into March’s lower shadow; April 2019 was a green candle with almost no upper and lower shadows;
  • Sequence of higher highs and higher lows since February 2016 is broken in December since then a new high has been made in May 2019
Weekly:
  • The week ending on May 31 was a large red candle with small upper shadow and almost no lower shadow;
    • Stochastics (9,1, 3): %K is below %D and near 0; %D made Bearish Divergence during the week of April 29
    • RSI (9) has fallen below 40; 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 -74.00 or -2.6% and 5-week ATR is 89.99
  • Last week’s pivot point=2781.03, R1=2811.54, R2=2871.02; S1=2721.55, S2=2691.04; S1/S2 pivot levels were breached
  • A down week; fourth in last five weeks and fifth 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
  • Below 10-week EMA and 39-week SMA; above 89-week SMA
  • Uptrend under pressure
Daily
  • A relatively small green candle that gapped at the open; with small upper shadow and long lower shadow making it look like a hammer
    • %K is above %D from below 10 and approaching 90
    • RSI-9 is above 50 and above its 8-period MA
    • The sequence of higher highs and higher lows since December 26, 2018 is broken on May 29
  • At/below 20-day EMA; below 50-day EMA; above 100-DAY SMA and 200-day SMA; 100-day SMA crossed is above 200-day SMA after for the first time since January 15 on May 22
  • Uptrend under pressure
2-Hour (e-mini future)
  • Rising after the gap down weekly open since 2:00 PM on June 3; broke a sequence of lower highs and lower lows since May 16
    • RSI-21 is rising since 2:00 AM on June 3 after making a Bullish Divergence near 25; moving along 75 after reaching a high near 90
    • %K is crisscrossing %D above 90 since higher since 6:00 AM on June 4;
  • Above 20-bar EMA, which is above EMA10 of EMA50
  • Bias: Up
30-Minute (e-mini future)
  • Moving sideways to up since 9:00 PM on Tuesday; broke above a double bottom pattern the 261.% extension target is near 2846.00
    • Broke above an ascending triangle at 3:00 AM; the 50% extension target is near 2844.00, 61.8% extension target is near 2847 .00 and 100% extension target is near 2858.0
    • RSI-21 is mostly rising since 10:30 AM on Wednesday after declining to just below 50; nearing 65
    • %K is crisscrossing %D above 80
  • Above 20-bar EMA, which is above EMA10 of EMA50
  • Bias: Up
15-Minute (e-mini future)
  • Bollinger Band (20, 2.0) is moving sideways to up since 10:00 PM on Tuesday
  • The Bollinger Band was relatively narrow from 00:00 AM to 3:00 AM; expanding since with price first walking up the upper band and the moving sideways
  • Stochastic (9, 1, 3): %K crossed above %D at 6:15 AM; moving higher
  • Bias: Up

Previous Session

Major U.S. indices mostly closed higher on Wednesday, June 5 in lower volume. It was a good follow-through day for most indices after the big gain on Tuesday but the lower volume dampens it impact. Russell 2000 closed down.

Most indices, however, made either doji like candle or a candle with small real body with long lower shadow. Indices opened higher and then declined and tested Tuesday’s close before turning up and closing higher than the open. All S&P sectors except Energy were up for the day.

From Briefing.com:

The S&P 500 advanced 0.8% on Wednesday, benefiting from follow-through buying interest on hope that the Fed will cut rates amid a slowing growth environment. The Dow Jones Industrial Average gained 0.8%, and the Nasdaq Composite gained 0.6%.

The Russell 2000 lost 0.1% in part due to lower oil prices ($51.66/bbl, -$1.87, -3.5%) weighing down energy stocks following some bearish inventory data. The S&P 500 energy sector declined 1.1%.

Gains were still seen across the other ten S&P 500 sectors, led by the utilities (+2.1%) and real estate (+2.3%) sectors. The outperformance in these defensive-oriented sectors reflected some reservations in adopting a full risk-on mindset, though.

[…]

The disappointing ADP report helped bolster this view, as the 2-yr yield dropped 10 basis points to 1.78% at its low following the report. The fed funds futures market now sees a 71.8% implied likelihood of a rate cut at the July 30-31 FOMC meeting.

Demand for Treasuries eased during the day, bringing yields off session lows, as equities advanced to session highs. The 2-yr yield finished four basis points lower at 1.84%, and the 10-yr yield finished unchanged at 2.12%. The U.S. Dollar Index advanced 0.3% to 97.34.

[…]

• The ADP Employment report showed an estimated 27,000 jobs were added to private-sector payrolls in May, well below the Briefing.com consensus estimate of 170,000 and the prior month’s downwardly revised 271,000 (from 275,000). Jobs in the goods-producing sector decreased by 43,000 while jobs in the service-providing sector increased by 71,000.
o The key takeaway from this report is that it will foment the concerns about the U.S. economy slowing in the second quarter. At the same time, though, it will feed the market’s belief that the Fed is going to be forced to cut the fed funds rate sooner rather than later.
• The ISM Non-Manufacturing Index increased to 56.9% (Briefing.com consensus 55.4%) from 55.5% in April. The dividing line between expansion and contraction is 50.0%, so the uptick in May reflects a slight acceleration in growth for the non-manufacturing sector.
o The key takeaway from the report is that growth in the sector is leveling off; and it was said in the report that respondents are “mostly optimistic about overall business conditions, but concerns remain about tariffs and employment resources.”
• The Federal Reserve’s June Beige Book described economic activity during the survey period as expanding at a “modest” pace, which represents a slight improvement from the previous report. Growth was reported across most districts, but there were signs of slowing in some regions. Vehicle sales decreased across most districts. Employment continued increasing nationwide while overall prices saw modest upward pressure.
• The weekly MBA Mortgage Applications Index increased 1.5% following a 3.3% decline in the prior week.