Morning Notes – Wednesday June 5, 2019

Directional Bias For The Day:

  • S&P Futures are higher; moving lower since 6:30 AM from a high of 2824.50;
  • Fallen back into a narrow horizontal channel on 30-minute chart from which price broke out at 5:00 AM
  • The odds are for a sideways to an up day with elevated volatility – watch for break below 2806.00 for change of fortune
  • Key economic data due:
    • ADP Non-Farm Employment Change (27K vs. 185K est.; prev. 271K ) at 8:15 AM
    • Final Services PMI (est. 50.9; prev. 50.9) at 9:45 AM
    • ISM Non-Manufacturing PMI ( est. 55.6; prev. 55.5) at 10:00 AM
    • Beige Book at 2:00 PM

Markets Around The World

  • Markets in the East closed mostly higher – Shanghai was down; Mumbai and Singapore were closed
  • European markets are mostly higher – Italy is down
  • Currencies:
    Up Down
    • EUR/USD
    • GBP/USD
    • USD/JPY
    • NZD/USD
    • USD/INR
    • Dollar index
    • USD/CHF
    • AUD/USD
    • USD/CAD
  • Commodities:
    Up Down
    • NatGas
    • Gold
    • Silver
    • Platinum
    • Sugar
    • Cotton
    • Cocoa
    • Crude Oil
    • Copper
    • Palladium
    • Coffee
  • Bonds
    • 10-yrs yield is at 2.088%, down from June 4 close of 2.119%;
    • 30-years is at 2.605%, down from 2.615%
    • 2-years yield is at 1.795%, up from 1.832%
    • The 10-Year-&-2-Year spread is at 0.293, up from 0.239

Key Levels:

  • Critical support levels for S&P 500 are 2791.09, 2784.70 and 2772.54
  • Critical resistance levels for S&P 500 are 2814.79, 2820.19 and 2832.91
  • Key levels for eMini futures: break above 2821.75, the high of 8:00 AM and break below 2806.00, the low of 2:30 AM

Pre-Open

  • On Tuesday, at 4:00 PM, S&P future (June contract) closed at 2803.25 and the index closed at 2803.27 – a spread of about -0.00 points; futures closed at 2805.00 for the day; the fair value is -1.75
  • Pre-NYSE session open, futures are higher – at 8:15 AM, S&P 500 futures were up by +10.50; Dow by +100 and NASDAQ by +34.25

Directional Bias Before Open

  • Weekly: Uptrend under pressure
  • Daily: Uptrend under pressure
  • 120-Min: Down-Up
  • 30-Min: Side-Up
  • 15-Min: Up-Side
  • 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 relatively large green candle with almost no upper and lower shadows
    • %K is crossed above %D from below 10; above 50
    • Stochastic (70, 1, 3) Pop since February 11 ended on May 9;
    • RSI-9 is bouncing off from near 25; above 40; above its 8-period MA
    • The sequence of higher highs and higher lows since December 26, 2018 is broken on May 29
  • Below 20-day EMA, 50-day EMA; at/below 100-DAY SMA; above 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 Monday; broke a sequence of lower highs and lower lows since May 16
    • RSI-21 is rising since 2:00 AM on Monday after making a Bullish Divergence near 25; above 80
    • %K is crisscrossing %D higher since 2:00 AM on Monday after making a Bullish Divergence near 20; above 90;
  • Above 20-bar EMA, which is above EMA10 of EMA50
  • Bias: Down-Up
30-Minute (e-mini future)
  • Moving up since 3:30 PM on Monday after making a double bottom; the 161.8% extension near 2814.00 is achieved and the 261.% extension target is near 2846.00
    • RSI-21 is moving around 65 since 10:00 AM on Tuesday
    • %K is crossed above %D at 2:30 AM from near 30; above 90
  • 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 since 10:00 PM
  • The Bollinger Band was narrow from 10:00 PM to 5:00 AM; expanding since with price walking up the upper band
  • Stochastic (9, 1, 3): %K is crisscrossing %D above 90
  • Bias: Up-Side

Previous Session

Major U.S. indices closed sharply higher on Tuesday, June 4 in mostly lower volume.  Dow Jones Transportation Average traded in higher volume. Indices gapped up at the open and then moved higher. Most made largest green candle since May 15 with almost no upper and lower shadows. Indices were in short term oversold region and ripe for a bounce.

From Briefing.com:

The stock market had its best day since early January, boosted by gains across most sectors and by the prevailing view that the market was due for a bounce from short-term oversold conditions. Each of the major averages rose at least 2.0%, led by the 2.7% gain in the Nasdaq Composite, and the S&P 500 (+2.1%) climbed back above its 200-day moving average (2775).

[…]

Cyclical sectors led the rally with the S&P 500 information technology (+3.3%), materials (+2.8%), financials (+2.7%), consumer discretionary (+2.6%), and industrials (+2.4%) sectors all finishing with gains over 2.0%. The defensive-oriented utilities (unch) and real estate (-0.6%) sectors were left out of the rally.

[…]

Counter to the view that the stock market was oversold on a short-term basis, the Treasury market exhibited weakness on the view that it had gotten overbought on a short-term basis. The 2-yr yield increased five basis points to 1.88%, and the 10-yr yield increased four basis points to 2.12%. The U.S. Dollar Index declined 0.1% to 97.10. WTI crude increased 0.5% to $53.53/bbl.

[…]

• Factory orders declined 0.8% m/m in April (Briefing.com consensus -0.9%) following a downwardly revised 1.3% increase (from 1.9%) in March. Excluding transportation, orders increased 0.3%.
o The key takeaway from the report is the understanding that business investment was weak in April, evidenced by the 1.0% m/m decline in nondefense capital goods orders excluding aircraft.

Morning Notes – Tuesday June 4, 2019

Directional Bias For The Day:

  • S&P Futures are higher; moving higher since 3:30 PM on Monday; new leg up since 2:30 AM; broke above double bottom pattern
  • The odds are for an up day with elevated volatility – watch for break below 2759.00 for change of fortune
  • No key economic data due:

Markets Around The World

  • Markets in the East closed mostly down – Sydney and Singapore were up
  • European markets are higher
  • Currencies:
    Up Down
    • Dollar index
    • GBP/USD
    • USD/JPY
    • USD/CHF
    • AUD/USD
    • USD/INR
    • EUR/USD
    • NZD/USD
    • USD/CAD
  • Commodities:
    Up Down
    • NatGas
    • Palladium
    • Sugar
    • Coffee
    • Cotton
    • Crude Oil
    • Gold
    • Silver
    • Copper
    • Platinum
    • Cocoa
  • Bonds
    • 10-yrs yield is at 2.125%, up from June 3 close of 2.081%;
    • 30-years is at 2.576%, up from 2.548%
    • 2-years yield is at 1.904%, up from 1.832%
    • The 10-Year-&-2-Year spread is at 0.221, down from 0.249

Key Levels:

  • Critical support levels for S&P 500 are 2728.81, 2723.02 and 2718.05
  • Critical resistance levels for S&P 500 are 2763.07, 2768.80 and 2776.74
  • Key levels for eMini futures: break above 2769.50, the high of 11:30 AM on June 3 and break below 2759.00, the low of 7:30 AM

Pre-Open

  • On Monday, at 4:00 PM, S&P future (June contract) closed at 2743.75 and the index closed at 2744.45 – a spread of about -0.75 points; futures closed at 2749.50 for the day; the fair value is -5.75
  • Pre-NYSE session open, futures are higher – at 8:30 AM, S&P 500 futures were up by +19.00; Dow by +168 and NASDAQ by +53.25

Directional Bias Before Open

  • Weekly: Uptrend under pressure
  • Daily: Uptrend under pressure
  • 120-Min: Down
  • 30-Min: Down-Side
  • 15-Min: Side
  • 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 small spinning top red candle with equal sized upper and lower shadows
    • %K is crossing above %D from below 10
    • Stochastic (70, 1, 3) Pop since February 11 ended on May 9; below 20
    • RSI-9 is still pointing down and is near 30; below its 8-period MA
    • The sequence of higher highs and higher lows since December 26, 2018 is broken
  • Below 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 under pressure
2-Hour (e-mini future)
  • Rising after the gap down weekly open;
    • RSI-21 is rising since 2:00 AM on Monday after making a Bullish Divergence
    • %K is crisscrossing %D higher since 2:00 AM on Monday; above 90; Bullish Divergence
  • Above 20-bar EMA but below EMA10 of EMA50
  • Bias: Down-Side
30-Minute (e-mini future)
  • Moving down since 9:30 AM on May 28 in steps;
  • Last leg is up since 3:30 PM on Monday after making a double bottom; a break above 2763.75 will complete the pattern; the 50% extension target is near 2779.00, 61.8% extension near 2783.00 and 100% extension target near 2795.00
    • RSI-21 is rising since 3:00 PM on Monday from near 40; above 50
    • %K is below %D since 6:00 AM after reaching 90
  • Above 20-bar EMA, which is above EMA10 of EMA50
  • Bias: Down-Side
15-Minute (e-mini future)
  • Bollinger Band (20, 2.0) is moving sideways to up since 11:00 PM on Sunday
  • The Bollinger Band was narrow from 10:00 PM on Monday to 3:00 AM; expanding since with price walking up the upper band since 3:00 AM
  • Stochastic (9, 1, 3): %K is below %D since 6:30 AM from above 90 after making a Bearish Divergence
  • Bias: Side

Previous Session

Major U.S. indices closed mixed on Monday, June 3 in mostly higher volume. S&P 500, NASDAQ Composite and Wilshire 5000 Total Market Index closed lower and others were up. Dow Jones Transportation Average traded in lower volume. Indices are short term oversold region and ripe for a bounce.

From Briefing.com:

The S&P 500 lost 0.3% on Monday, as shares of big tech companies fell on various reports that heightened antitrust concerns. Lingering trade and growth concerns also helped curb risk sentiment and underpin the strength in U.S. Treasuries. A swarm of buyers in the last 30 minutes of action, however, helped the broader market close off its session lows.

The tech-sensitive Nasdaq Composite fell 1.6%. The blue-chip Dow Jones Industrial Average (+0.02%) finished fractionally higher, and the small-cap Russell 2000 increased 0.3%.

[…]

Growing expectations for a rate cut, and general growth concerns, helped send the 2-yr yield down 12 basis points to 1.83%. The 10-yr yield declined six basis points to 2.08%. The U.S. Dollar Index fell 0.5% to 97.22. WTI crude decreased 0.5% to $53.25/bbl, giving up an intraday rebound effort.

[…]

• The ISM Manufacturing Index for May checked in at 52.1% (Briefing.com consensus 52.6%), down from 52.8% in April. The May reading is the lowest since October 2016. The May reading is the lowest since October 2016.
o The key takeaway from the report is that it reflects a deceleration in national manufacturing activity that will contribute to the burgeoning growth concerns for the U.S. economy. According to the ISM, the past relationship between the PMI and the overall economy indicates the PMI for May corresponds to a 2.7% increase in real GDP on an annualized basis.
• Total construction spending was unchanged in April (Briefing.com consensus +0.4%) following an upwardly revised 0.1% increase (from -0.9%) in March.
o The key takeaway from the report is that it was better than the headline suggests, after accounting for the March revision, yet that still didn’t change the fact that total construction spending is soft, evidenced by the 1.2% yr/yr decline that was driven by an 11.2% yr/yr decline in residential spending.

Morning Notes – Monday June 3, 2019

Directional Bias For The Day:

  • S&P Futures are lower; moving sideways to up since 6:00 PM on Sunday after a gap down open for the week
  • The odds are for a sideways to an up day with elevated volatility and substantial potential to reverse the bounce and resume downtrend
  • Key economic data due:
    • ISM Manufacturing PMI (est. 53.0; prev.52.8) at 10:00 AM
    • Construction Spending (est. 0.5%; prev. -0.9%) at 10:00 AM
    • ISM Manufacturing Prices (est. 51.5; prev. 50.0) at 10:00 AM
    • Total Vehicle Sales (est. 16.8M; prev. 16.4M) All Day

Markets Around The World

  • Markets in the East closed mixed – Shanghai, Hong Kog, Tokyo and Sydney were down; Mumbai, Seoul and Singapore were up
  • European markets are lower
  • Currencies:
    Up Down
    • EUR/USD
    • USD/JPY
    • AUD/USD
    • NZD/USD
    • Dollar index
    • GBP/USD
    • USD/CHF
    • USD/CAD
    • USD/INR
  • Commodities:
    Up Down
    • Crude Oil
    • Gold
    • Silver
    • Copper
    • Platinum
    • Palladium
    • NatGas
    • Sugar
    • Coffee
    • Cotton
    • Cocoa
  • Bonds
    • 10-yrs yield is at 2.112%, down from May 31 close of 2.142%;
    • 30-years is at 2.562%, down from 2.583%
    • 2-years yield is at 1.892%, down from 1.940%
    • The 10-Year-&-2-Year spread is at 0.220, down from 0.202

Key Levels:

  • Critical support levels for S&P 500 are 2747.61, 2744.13 and 2731.19
  • Critical resistance levels for S&P 500 are 2760.69, 2764.36 and 2768.80
  • Key levels for eMini futures: break above 2751.50, the low of 9:30 AM on May 31; break above 2759.00, the high of 3:30 PM on Friday; and break below 2741.25, the low of 6:30 AM

Pre-Open

  • On Friday, at 4:00 PM, S&P future (June contract) closed at 2752.00 and the index closed at 2752.06 – a spread of about -0.00 points; futures closed at 2752.50 for the day; the fair value is -0.50
  • Pre-NYSE session open, futures are lower – at 8:45 AM, S&P 500 futures were down by -4.25; Dow by -41 and NASDAQ by -22.50

Directional Bias Before Open

  • Weekly: Uptrend under pressure
  • Daily: Uptrend under pressure
  • 120-Min: Down
  • 30-Min: Down-Side
  • 15-Min: Down-Side
  • 6-Min: Side-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 red candle that gapped down; with small upper shadow and almost no lower shadow
    • %K is again below %D and below 10
    • Stochastic (70, 1, 3) Pop since February 11 ended on May 9; nearing 30
    • RSI-9 is turning down from near 40; below its 8-period MA
    • The sequence of higher highs and higher lows since December 26, 2018 is broken
  • Below 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 under pressure
2-Hour (e-mini future)
  • Gapped down at the week’s open; Moving down since 12:00 PM on May 16;  broke below a descending triangle at 2:00 PM on May 28; the 61.8% extension target near 2745.00 is achieved;
    • RSI-21 is bouncing since 2:00 AM after making a Bullish Divergence
    • %K is above %D since 2:00 AM from near 10; Bullish Divergence
  • Below 20-bar EMA, which is below EMA10 of EMA50
  • Bias: Down
30-Minute (e-mini future)
  • Moving down since 9:30 AM on May 28 in steps; broke below a horizontal trading range at 2:00 PM and then a support level at 3:30 PM on May 28; 261.8% extension target of bigger pattern is near 2710.00; moving sideways to up since 6:00 PM on Sunday after the gap down open for the week; below the gap
    • RSI-21 is rising since 6:30 PM on Sunday from below 30; Bullish Divergence at 3:30 AM
    • %K is crisscrossing %D higher from below 10; above 80; %K Bu8llish Divergence at 3:00 AM
  • Above 20-bar EMA but below EMA10 of EMA50
  • Bias: Down-Side
15-Minute (e-mini future)
  • Bollinger Band (20, 2.0) is moving sideways to up since 11:00 PM
  • The Bollinger Band was narrow from 11:00 PM to 2:30 AM; expanding since with price walking first down the lower bound and then walking up the upper band since 3:00 AM
  • Stochastic (9, 1, 3): %K is crisscrossing %D around 70-80
  • Bias: Down-Side

Previous Session

Major U.S. indices closed sharply lower on Friday, May 31 in higher volume. Indices gapped down at the open and the mostly declined for the rest of the day. The down gap created a2-day hanging island, which is quite bearish.

For the week, the major indices decline in mostly lower volume. Dow Jones Transportation Average traded n higher volume during the week. Only Utility, Healthcare and Real Estate were up for the week.

From Briefing.com:

U.S. stocks, Treasury yields, and oil prices all dropped on Friday after President Trump surprised the market by threatening to impose a 5% tariff rate on all goods imported from Mexico. Friday’s 1.3% decline in the S&P 500 sent it below its 200-day moving average (2776) and extended its weekly decline to 2.6%.

The Dow Jones Industrial Average (-1.4%), the Nasdaq Composite (-1.5%), and the Russell 2000 (-1.4%) extended their weekly losses to 3.0%, 2.4%, and 3.2%.

[…]

Global growth concerns were transparent by the 5.2% drop in WTI crude ($53.48/bbl, -$2.92) and by investors seeking safety in a crowded U.S. Treasury market. The 2-yr yield dropped 12 basis points to 1.94%, and the 10-yr yield dropped nine basis points to 2.14%. The U.S. Dollar Index fell 0.4% to 97.76.

[…]

• Personal income increased 0.5% in April (Briefing.com consensus 0.3%) on top of a 0.1% increase in March. Personal spending rose 0.3% (Briefing.com consensus 0.2%) on top of an upwardly revised 1.1% increase (from 0.9%) in March. The PCE Price Index was up 0.3% m/m, as expected, while the core PCE Price Index, which excludes food and energy, jumped 0.2%, as expected.
o The key takeaway from the report is that real PCE was unchanged in April. That will be another data point that leads to forecasts calling for much slower real GDP growth in the second quarter than the 3.1% real GDP growth seen in the first quarter.
• The final May reading for the University of Michigan Index of Consumer Sentiment checked in at 100.0 (Briefing.com consensus 101.5) versus the preliminary reading of 97.2.
o The key takeaway from the report was the acknowledgment that “confidence significantly eroded in the last two weeks of May” on account of concerns about the tariff actions.
• The Chicago PMI for May increased to 54.2 from 52.6 in April.