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;
  • 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 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 ng %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.

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