Morning Notes – Tuesday July 23, 2019

Directional Bias For The Day:

  • S&P Futures are higher; drifting higher since 4:40 PM on Friday in an upsloping flag, which is usually bearish
  • The odds are for an up to sideways day from pre-open levels – watch for break below 2989.00 for change of fortune
  • Key economic data due:
    • HPI (est. 0.3%; prev. 0.4%) at 9:00 AM
    • Existing Home Sales (est. 5.23M; prev. 5.34M0 at 10:00 AM
    • Richmond Manufacturing Index (est. 5; prev. 3) at 10:00 AM

Markets Around The World

    • Markets in the East closed mostly higher – Mumbai was down
    • European markets are higher
    • Currencies:
Up Down
  • Dollar index
  • USD/JPY
  • USD/CHF
  • USD/CAD
  • EUR/USD
  • GBP/USD
  • AUD/USD
  • NZD/USD
  • USD/INR
  • Commodities:
    Up Down
    • NatGas
    • Silver
    • Platinum
    • Cotton
    • Crude Oil
    • Gold
    • Copper
    • Palladium
    • Sugar
    • Coffee
    • Cocoa
  • Bonds
    • 10-yrs yield is at 2.043%, down from July 22 close of 2.048%;
    • 30-years is at 2.570%, down from 2.578%
    • 2-years yield is at 1.823%, down from 1.823%
    • The 10-Year-&-2-Year spread is at 0.220, down from 0.222

Key Levels:

  • Critical support levels for S&P 500 are 2982.50, 2976.65 and 2972.44
  • Critical resistance levels for S&P 500 are 3000.00, 3006.02 and 2009.53
  • Key levels for eMini futures: break above 3003.00, the high of 12:30 PM n July 19 and break below 2989.75, the low of 2:00 AM

Pre-Open

  • On Monday, at 4:00 PM, S&P future (June contract) closed at 2987.75 and the index closed at 2985.03 – a spread of about +2.75 points; futures closed at 2989.00 for the day; the fair value is -1.25
  • Pre-NYSE session open, futures are higher – at 8:00 AM, S&P 500 futures were up by +10.75; Dow by +109 and NASDAQ by +34.35

Directional Bias Before Open

  • Weekly: Uptrend resumed
  • Daily: Uptrend
  • 120-Min:Down-Side
  • 30-Min: Side-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 19 was a large bearish engulfing candle near the upper bound of a broadening pattern
    • At the upper bound of a broadening pattern
    • Stochastic (9,1, 3): %K crossed below %D from above 90; potential Bearish Divergence for %D
    • RSI (9) is turning down from just below 70; potential Bearish Divergence
    • The index bounced off the 89-week SMA during the week of June 7
  • Last week was down -37.16 or -1.2%; the 5-week ATR is 44.71, lower than previous week
  • Last week’s pivot point=2989.17, R1=3005.24, R2=3033.88; S1=2960.53, S2=2944.46; S1 pivot level was breached
  • A down week; third 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 relatively small red harami doji candle within the lower half of previous day’s real body
    • %K is below %D and nearing 20
    • RSI-9 is turning down from just above 65 and after making a 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)
  • Drifting up since 4:00 AM on July 19 after mostly declining since July 15; nearing a resistance around 3009.00
    • RSI-21 is bouncing from below 30 and after making a Bullish Divergence; near 65
    • %K is crisscrossing %D around 80
    • Above EMA10 of EMA50, which is above 20-bar EMA
  • Bias: Down-Side
30-Minute (e-mini future)
  • Drifting up since 4:30 PM on July19; forming an upsloping Flag
    • RSI-21 rising from below 25 to near 65
    • %K is crisscrossing %D around 80
    • Above 20-bar EMA but below EMA10 of EMA50
  • Bias: Side-Up
15-Minute (e-mini future)
  • Bollinger Band (20, 2.0) is drifting higher since 1:00 AM on July 22
  • The Bollinger Band narrowed from 00:45 AM to 3:45 AM; expanding since with price walking up the upper band
  • Stochastic (9, 1, 3): %K is crisscrossing %D around 80
  • Bias: Up

Previous Session

Major U.S. indices closed mostly higher on Monday, July 22 in lower volume. Russell 20000 and NYSE Composite closed down. The day’s range was small. In the initial direction was unclear but from midday to close the indices advanced slowly.

From Briefing.com:

The S&P 500 increased 0.3% on Monday in a tech-driven advance. Noticeable gains in Apple (AAPL 207.22, +4.63, +2.3%), Facebook (FB 202.32, +23.96, +2.0%), Amazon (AMZN 1985.63, +21.11, +1.1%), and Microsoft (MSFT 138.43, +1.81, +1.3%) contributed to the outperformance of the Nasdaq Composite (+0.7%).

The Dow Jones Industrial Average increased 0.1%, while the Russell 2000 declined 0.2%.

The S&P 500 information technology sector (+1.2%) was Monday’s outright leader, led by shares of Apple and semiconductor companies. The other ten S&P 500 sectors didn’t stray too far from their unchanged marks, although the consumer staples sector (-0.5%) did show relative weakness.

[…]

Interestingly, declining issues outpaced advancing issues in both the NYSE and Nasdaq on Monday.

[…]

U.S. Treasuries closed slightly higher in a quiet session. The 2-yr yield and the 10-yr yield declined one basis point each to 1.81% and 2.04%, respectively. The U.S. Dollar Index increased 0.2% to 97.29. WTI crude advanced 1.0% to $56.20/bbl amid lingering concerns that tensions in the Middle East will disrupt supply.

[…].