Morning Notes – Friday July 12, 2019

Directional Bias For The Day:

  • S&P Futures are higher; moving sideways to up since 10:00 PM on Wednesday
  • The odds are for an up to sideways day – watch for break below 2991.50 for change of fortune
  • Key economic data due:
    • PPI ( 0.1% vs. 0.1% est.; prev. 0.1%) at 8:30 AM
    • Core PPI ( 0.3% vs. 0.2% est.; prev. 0.2%) at 8:30 AM

Markets Around The World

  • Markets in the East closed mostly higher – Sydney and Mumbai closed down
  • European markets are mostly higher – Germany and Switzerland are down;
  • Currencies:
    Up Down
    • Dollar index
    • GBP/USD
    • AUD/USD
    • NZD/USD
    • USD/INR
    • EUR/USD
    • USD/JPY
    • USD/CHF
    • USD/CAD
  • Commodities:
    Up Down
    • Crude Oil
    • NatGas
    • Gold
      Silver
    • Copper
    • Platinum
    • Palladium
    • Sugar
    • Coffee
    • Cotton
    • Cocoa
  • Bonds
    • 10-yrs yield closed at 2.139%, up from July 10 close of 2.061%;
    • 30-years is at 2.662%, up from 2.571%
    • 2-years yield is at 1.873%, up from 1.832%
    • The 10-Year-&-2-Year spread is at 0.266, up from 0.229

Key Levels:

  • Critical support levels for S&P 500 are 2994.18, 2988.80 and 2984.62
  • Critical resistance levels for S&P 500 are 3005.23, 3010.54 and 30180.76
  • Key levels for eMini futures: break above 3012.50, the high of 9:30 PM and break below 3007.75, the low of 3:30 AM

Pre-Open

  • On Thursday, at 4:00 PM, S&P future (June contract) closed at 3003.50 and the index closed at 2999.91 – a spread of about +3.50 points; futures closed at 3004.00 for the day; the fair value is -0.50
  • Pre-NYSE session open, futures are higher – at 8:30 AM, S&P 500 futures were up by +7.50; Dow by +89 and NASDAQ by +17.50

Directional Bias Before Open

  • Weekly: Uptrend resumed
  • Daily: Uptrend
  • 120-Min:Side-Up
  • 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
  • June 2019 was a large green Piercing or Bullish Engulfing candle that closed near the open of previous week;
  • 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 July 6 was a green spinning top candle with small upper and long lower shadow; made all time intra-day and closing high
    • Stochastic (9,1, 3): %K and %D are above 90; potential Bearish Divergence for %D
    • RSI (9) is above 65; potential Bearish Divergence
    • The index bounced off the 89-week SMA during the week of June 7
  • Last week was up +48.65 or +1.7% and 5-week ATR is 73.32
  • Last week’s pivot point=2979.49, R1=3006.76, R2=3023.11; S1=2963.14, S2=2935.87; R1/R2 pivot levels were breached
  • An up week after 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
  • Above 10-week EMA, 39-week SMA and 89-week SMA
  • Uptrend resumed
Daily
  • A small green doji candle that gapped up at the open; small upper shadow and relatively longer lower shadow
    • %K is above %D; but below the level when the index was lower raising the chance of Bearish Divergence
    • RSI-9 is turning up above 70 and is in similar position as Stochastic
    • The sequence of higher highs and higher lows since June 3
  • Above 20-day EMA, 50-day EMA, 100-DAY SMA and 200-day SMA;
  • Uptrend
2-Hour (e-mini future)
  • Moving sideways to up since 10:00 AM on July 10 after bouncing off from a support level on July 9;
    • RSI-21 is moving along 60 since 11:00 AM on Wednesday
      %K is crisscrossing %D above 80
    • Above 20-bar EMA, which is above EMA10 of EMA50
  • Bias: Side-Up
30-Minute (e-mini future)
  • Moving sideways since 9:00 PM on July 11
    • RSI-21 is moving along 60 since 11:00 AM on Wednesday
    • %K is crisscrossing %D down from above 90
  • At/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 since 11:00 PM on Thursday
  • The Bollinger Band is relatively narrow since 1:415 AM
  • Stochastic (9, 1, 3): %K crossed above %D at 7:45 AM
  • Bias: Side-Up

Previous Session

Major U.S. indices closed mostly higher on Thursday, July 11 in mixed volume. NASDAQ Composite and Russell 2000 closed down. Dow Jones Industrial Average, Dow Jones Transportation Average and NYSE Composite traded in higher volume. DJIA made all time intraday and closing high. S&P 500 made all time closing high. NASDAQ Composite had made all time highs on Wednesday.

From Briefing.com:

The S&P 500 (+0.2%) and Dow Jones Industrial Average (+0.9%) closed at record highs on Thursday amid lingering rate-cut optimism. The Dow also hit the 27,000 level for the first time, but the Nasdaq Composite (-0.1%) and Russell 2000 (-0.5%) were unable to keep pace.

[…]

Thursday’s leaders included most of the S&P 500 cyclical sectors. The industrials (+0.7%), financials (+0.6%), and materials (+0.4%) sectors finished atop the standings. The real estate sector (-1.2%) was the day’s outright laggard amid higher U.S. Treasury yields.

The 2-yr yield increased three basis points to 1.85%, and the 10-yr yield increased six basis points to 2.12%. The U.S. Dollar Index declined 0.1% to 97.06. WTI crude declined 0.4% to $60.26/bbl.

[…]

• Total CPI increased 0.1% m/m in June (Briefing.com consensus 0.0%) while core CPI, which excludes food and energy, rose 0.3% (Briefing.com consensus +0.2%). On a yr/yr basis, total CPI was up 1.6%, versus 1.8% in May, while core CPI was up 2.1%, versus 2.0% in May.
o The key takeaway from the report was that the yr/yr uptick in core CPI should seemingly diminish the prospect of a 50-basis points rate cut at the July meeting.
• Initial claims for the week ending July 6 decreased by 13,000 to 209,000 (Briefing.com consensus 222,000). Continuing claims for the week ending June 29 jumped by 27,000 to 1.723 million.
o The key takeaway from the report is that it continues to reflect a tight labor market where employers are reluctant to let go of employees.
• The Treasury Budget for June showed a deficit of $8.5 billion versus a deficit of $74.8 billion for the same period one year ago. The Treasury Budget is not seasonally adjusted, so the June deficit cannot be compared to the $207.7 billion deficit for May.
o The fiscal year-to-date deficit is $747.1 billion versus a deficit of $607.1 billion for the same period ago. The budget deficit over the last 12 months is $919 billion, versus $985.4 billion for the 12 months ending in May.