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;
  • Third up month in a row
  • 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.

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