Morning Notes – Monday July 15, 2019

Directional Bias For The Day:

  • S&P Futures are higher; moving up since 5:00 AM on July 9
  • The odds are for an up to sideways day – watch for break below 3010.75 for change of fortune
  • Key economic data due:
    • Empire State Manufacturing Index ( 4.3 vs. 1.6; prev. -08.6) at 8:30 AM

Markets Around The World

  • Markets in the East closed mixed – Shanghai, Hong Kong and Mumbai closed up; Tokyo, Sydney, Seoul and Singapore closed down
  • European markets are higher
  • Currencies:
  • Up Down
    • Dollar index
    • USD/JPY
    • AUD/USD
    • NZD/USD
    • EUR/USD
    • GBP/USD
    • USD/CHF
    • USD/CAD
    • USD/INR
  • Commodities:
    Up Down
    • Crude Oil
    • Gold
    • Silver
    • Copper
    • Platinum
    • Palladium
    • Cotton
    • NatGas
    • Sugar
    • Coffee
    • Cocoa
  • Bonds
    • 10-yrs yield is at 2.111%, up from July 12 close of 2.106%;
    • 30-years is at 2.638%, up from 2.633%
    • 2-years yield is at 1.845%, down from 1.857%
    • The 10-Year-&-2-Year spread is at 0.266, up from 0.249

Key Levels:

  • Critical support levels for S&P 500 are 3004.51, 2999.90 and 2988.80
  • Critical resistance levels for S&P 500 are 3021.90, 3029.89 and 3030.65
  • Key levels for eMini futures: break above 3023.50, the high of 3:30 AM and break below 3016.50, the low of 5:30 AM

Pre-Open

  • On Friday, at 4:00 PM, S&P future (June contract) closed at 3017.00 and the index closed at 3013.77 – a spread of about +3.25 points; futures closed at 3015.50 for the day; the fair value is +1.50
  • Pre-NYSE session open, futures are higher – at 8:30 AM, S&P 500 futures were up by +6.50; Dow by +51 and NASDAQ by +23.25

Directional Bias Before Open

  • Weekly: Uptrend resumed
  • Daily: Uptrend
  • 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
  • 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 12 was a green candle with almost no upper shadow and small lower shadow; made all time intra-day and closing high
    • At the upper bound of a broadening pattern
    • Stochastic (9,1, 3): %K and %D are above 90; potential Bearish Divergence for %D
    • RSI (9) is rising and above 65; potential Bearish Divergence
    • The index bounced off the 89-week SMA during the week of June 7
  • Last week was up +23.36 or +0.8% and 5-week ATR is 52.19
  • Last week’s pivot point=2997.04, R1=3030.65, R2=3047.52; S1=2980.17, S2=2946.56; R1 pivot level was breached
  • An up week; fourth in last five weeks and fifth in last ten weeks
  • Last swing low, 2728.81, was the low on June 3, 2018; previous all-time high of 2940.91 was breached during July 1 week
  • Above 10-week EMA, 39-week SMA and 89-week SMA
  • Uptrend resumed
Daily
  • A green doji candle with very small upper and lower shadows; continuing the break above a cup-with-handle pattern
    • %K is above %D and above 90; potential chance of Bearish Divergence
    • RSI-9 is 70; potential Bearish Divergence
    • 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 higher ; from lower-left, on June 12, to upper-right corner, today, on the chart;
    • RSI-21 is mostly moving between 50 and 65 since 6:00 AM on July 10; potential Bearish Divergence
    • %K is crisscrossing %D around 80
    • Above 20-bar EMA, which is above EMA10 of EMA50
  • Bias: Up
30-Minute (e-mini future)
  • Moving higher since 9:00 AM on July 9
    • RSI-21 is moving between 50 and 65 since 3:30 PM on July 11
    • %K is above %D down below 20 since 5:30 AM
  • 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 since 2:00 PM on July 12
  • The Bollinger Band was relatively narrow from 8:00 PM to 10:00 PM; expanding since
  • Stochastic (9, 1, 3): %K crossed below %D at 8:00 AM
  • Bias: Up

Previous Session

Major U.S. indices closed higher on Friday, July 12 in lower volume. Dow Jones Industrial Average, S&P 500, NASDAQ Composite and Wilshire 5000 Total Market Index are made all time highs – intraday and closing – and are following through on the break above a triple-top/cup-with-handle pattern. Russell 2000 closed down and Dow Jones Transportation Average are quite off their all time highs and NYSE Composite is very close to its.

From Briefing.com:

The major averages ended the week at fresh record highs after a steady daylong push that was paced by the Dow Jones Industrial Average (+0.9%) while the Nasdaq (+0.6%) and S&P 500 (+0.5%) recorded slimmer gains. The small cap Russell 2000 (+0.8%) had a better showing than its large cap peers, but the index has another 10.0% to gain before revisiting its record from last year.

Today’s advance was supported by continued hope for a rate cut taking place as soon as July 31.

[…]

Eight out of eleven sectors recorded gains on Friday, with cyclical groups faring better than the countercyclical side. Industrials (+1.8%) and consumer discretionary (+1.1%) spent the day atop the leaderboard to end the week with respective gains of 1.2% and 2.1%.

Industrials rallied alongside heavyweight Boeing (BA 365.33, +6.33, +1.8%) while transport stocks outperformed. The Dow Jones Transportation Average jumped 2.4% with trucking names leading the push. JB Hunt (JBHT 92.94, +5.18, +5.9%) and Ryder (R 57.53, +3.14, +5.8%) spiked near 6.0% apiece, even though peer, U.S. Xpress (USX 4.32, -0.53, -10.9%), warned that industry conditions have worsened.

[…]

Treasuries started the day in the red, but a daylong rebound lifted all tenors into the green by the close. The 10-yr yield dipped one basis point to 2.11%. The U.S. Dollar Index returned into the neighborhood of its 200-day moving average (96.77), sliding 0.3% to 96.81.

Today’s economic data was limited to June PPI:
• The index for final demand increased 0.1% m/m in June (Briefing.com consensus 0.0%), held back by a 3.1% drop in the index for final demand energy, while the index for final demand, excluding food and energy, rose 0.3% m/m (Briefing.com consensus +0.2%). Those readings left the index for final demand up 1.7% yr/yr, versus 1.8% yr/yr in May. That is the lowest 12-month change since January 2017. Core PPI, however, was up 2.3% yr/yr, which was unchanged from May.
o The key takeaway from the report is that Producer Price Index for June, like the Consumer Price Index for June, didn’t exactly support the case for a 50-basis points cut in July. Some might argue, too, that it didn’t event support the case for a 25-basis points cut in July, yet that’s almost a moot (and mute) argument given the subtext of Mr. Powell’s remarks in his semiannual monetary policy testimony.