Morning Notes – Wednesday July 24, 2019

Directional Bias For The Day:

  • S&P Futures are lower; drifting sideways to lower since 1:30 PM; the upsloping flag since Friday is in danger of breaking to downside
  • The odds are for an down to sideways day from pre-open levels – watch for break above 3008.25 for change of fortune
  • Key economic data due:
    • Flash Manufacturing PMI (est. 50.9; prev. 50.6) at 9:45 AM
    • Flash Services PMI  (est. 51.6; prev. 51.6) at 9:45 AM
    • New Homes Index (est. 659K; prev. 626K) at 10:00 AM

Markets Around The World

    • Markets in the East closed mixed – Shanghai, Hong Kong, Tokyo and Sydney closed up; Mumbai, Seoul and Singapore closed down
    • European markets are mixed – Germany, Spain and Italy are up; U.K. France, Switzerland and STOXX 600 are down
    • Currencies:
Up Down
  • GBP/USD
  • NZD/USD
  • Dollar index
  • EUR/USD
  • USD/JPY
  • USD/CHF
  • AUD/USD
  • USD/CAD
  • USD/INR
  • Commodities:
    Up Down
    • Crude Oil
    • Gold
    • Silver
    • Copper
    • Platinum
    • Palladium
    • Coffee
    • Cotton
    • Cocoa
    • NatGas
    • Sugar
  • Bonds
    • 10-yrs yield is at 2.074%, down from July 22 close of 2.043%;
    • 30-years is at 2.608%, down from 2.570%
    • 2-years yield is at 1.835%, 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 3000.47, 2988.56 and 2982.50
  • Critical resistance levels for S&P 500 are 3006.02, 3009.53 and 3017.80
  • Key levels for eMini futures: break above 3008.25, the high of 11:00 PM and break below 2996.00, the low of 5:30 AM

Pre-Open

  • On Tuesday, at 4:00 PM, S&P future (June contract) closed at 3007.50 and the index closed at 3005.47 – a spread of about +2.00 points; futures closed at 3008.00 for the day; the fair value is -0.50
  • Pre-NYSE session open, futures are lower – at 7:45 AM, S&P 500 futures were down by -8.25; Dow by -88 and NASDAQ by -32.75

Directional Bias Before Open

  • Weekly: Uptrend resumed
  • Daily: Uptrend
  • 120-Min:Side
  • 30-Min: Up
  • 15-Min: Up-Side
  • 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 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 green candle that gapped up at the open and stayed above the gap; small upper and lower shadows
    • %K crossed above %D from near 20
    • RSI-9 is turning up from near 55; above 60
    • 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; moving sideways since 2:00 PM on Tuesday near a resistance around 3009.00
    • RSI-21 is declining since 2:00 PM on Tuesday
    • %K crossed below %D from above 80 at 00:00 AM
    • At/above 20-bar EMA, which is above EMA10 of EMA50
  • Bias: Side
30-Minute (e-mini future)
  • Drifting up since 4:30 PM on July19; forming an upsloping Flag; near the uptrend line underlying the flag
    • RSI-21 declined to 40 from above 65
    • %K crossed above %D from below 20
    • Below EMA10 of EMA50, which is below 20-bar EMA
  • Bias: Up
15-Minute (e-mini future)
  • Bollinger Band (20, 2.0) is drifting down to flat since 7:45 PM on July 23
  • The Bollinger Band narrowed from 10:30 PM to 2:45 AM; expanding since with price walking down the lower band
  • Stochastic (9, 1, 3): %K is above %D since 5:45 AM;
  • Bias: Up-Side

Previous Session

Major U.S. indices closed higher on Tuesday, July 23 in higher volume. The indices gapped up at the open and after initial hesitation and little decline, they mostly rose in the afternoon.

From Briefing.com:

The S&P 500 increased 0.7% on Tuesday, bolstered by encouraging trade news and positive earnings reports from widely-held companies. The Dow Jones Industrial Average (+0.7%), Nasdaq Composite (+0.6%), and Russell 2000 (+0.7%) advanced in-line with the benchmark index.

[…]

The news pushed the S&P 500 back above the 3000 level, where it would stay above on a closing basis. Ten of the 11 S&P 500 sectors finished higher, led by the trade-sensitive materials (+2.0%) and industrials (+1.2%) sectors. The utilities sector was the lone holdout, finishing lower by 0.6%.

[…]

U.S. Treasuries finished on a lower note, pushing yields higher across the curve. The 2-yr yield increased two basis points to 1.83%, and the 10-yr yield increased three basis points to 2.07%. The U.S. Dollar Index advanced 0.5% to 97.74, helped by some weakness in the euro. WTI crude rose 0.9% to $56.72/bbl.

[…]

• Existing home sales decreased 1.7% month-over-month in June to a seasonally-adjusted annual rate of 5.27 million (Briefing.com consensus 5.30 million) from an upwardly revised 5.36 million (from 5.34 million) in May. Total sales were 2.2% lower than the same period a year ago.
o The key takeaway from the report is that the drop in mortgage rates has failed to spur a meaningful pickup in existing home sales, which continue to be constrained by the lack of available supply at lower price points.
• The FHFA Housing Price Index for May increased 0.1% after advancing 0.4% in June.