Morning Notes – Thursday July 25, 2019

Directional Bias For The Day:

  • S&P Futures are higher; drifting sideways to up;
  • The odds are for an up day – watch for break below 3019.00 for change of fortune
  • Watch for emerging Stochastic Bearish Divergence on daily charts
  • Key economic data due:
    • ECB Monetary Policy Statement at 7:45 AM
    • ECB Press Conference at 8:0AM
    • Durable Goods ((est. 0.8%; prev. -1.3%) at 8:30 AM
    • Core Durable Goods (est. 0.2% ; prev. 0.4%) at 8:30 AM
    • Unemployment Claims ( est. 220K; prev. 216K) at 8:30 AM

Markets Around The World

    • Markets in the East closed mostly higher – Mumbai and Seoul closed down
    • European markets are higher
    • Currencies:
Up Down
  • Dollar index
  • GBP/USD
  • USD/CHF
  • USD/INR
  • EUR/USD
  • USD/JPY
  • AUD/USD
  • NZD/USD
  • USD/CAD
  • Commodities:
    Up Down
    • Crude Oil
    • NatGas
    • Gold
    • Silver
    • Copper
    • Platinum
    • Palladium
    • Sugar
    • Coffee
    • Cotton
    • Cocoa
  • Bonds
    • 10-yrs yield is at 2.050%, down from July 23 close of 2.074%;
    • 30-years is at 2.578%, down from 2.608%
    • 2-years yield is at 1.822%, down from 1.835%
    • The 10-Year-&-2-Year spread is at 0.228, down from 0.239

Key Levels:

  • Critical support levels for S&P 500 are 300.37, 3003.222 and 2996.82
  • Critical resistance levels for S&P 500 are 3027.16, 3034.76 and 3049.93
  • Key levels for eMini futures: break above 3027.25, the high of 7:30 AM and break below 3019.00, the low of 6:30 AM

Pre-Open

  • On Wednesday, at 4:00 PM, S&P future (June contract) closed at 3021.50 and the index closed at 3019.56 – a spread of about +2.00 points; futures closed at 3021.50 for the day; the fair value is 0.00
  • Pre-NYSE session open, futures are higher – at 7:45 AM, S&P 500 futures were up by +4.75; Dow by +100 and NASDAQ down by -4.25

Directional Bias Before Open

  • Weekly: Uptrend resumed
  • Daily: Uptrend
  • 120-Min:Up
  • 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 with small upper and lower shadows; breaking above highs
    • %K crossed above %D from near 20; potential Bearish Divergence
    • 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;
    • RSI-21 moving around 60 with down bias since 12:00 PM on Wednesday
    • %K is %D since 00:00 AM
    • Above 20-bar EMA, which is above EMA10 of EMA50
  • Bias: Up
30-Minute (e-mini future)
  • Moving up since 4:30 PM on July19;
    • RSI-21 is declining from above 70 since 4:00 PM on Wednesday; below 60
    • %K crisscrossing %D lower since 00 from above 80
    • At/below 20-bar EMA, which is above EMA10 of EMA50
  • Bias: Up
15-Minute (e-mini future)
  • Bollinger Band (20, 2.0) is drifting sideways to down to  since 9:15 PM on July 24
  • The Bollinger Band narrowed at 9:15 PM
  • Stochastic (9, 1, 3): %K is above %D since 6:30 AM;
  • Bias: Up-Side

Previous Session

Major U.S. indices closed mostly higher on Wednesday, July 24 in mixed volume. Dow Jones Industrial Average closed lower. DJIA and NASDAQ Composite traded in lower volume. S&P 500, NASDAQ Composite and Wilshire 5000 Total Market Index made all time highs.

From Briefing.com:

The S&P 500 (+0.5%) and Nasdaq Composite (+0.9%) set new record highs on Wednesday, boosted by out-sized gains in the semiconductor stocks and by shares of companies that beat earnings estimates. The Russell 2000 rose 1.6%.

The Dow Jones Industrial Average, however, lost 0.3% amid noticeable losses in Boeing (BA 361.43, -11.54, -3.1%) and Caterpillar (CAT 131.91, -6.19, -4.5%) following disappointing earnings reports.

Today’s advance was forged in the afternoon, as the market began to shake off several early concerns and instead rally around the host of companies that did provide good earnings news.

[…]

The S&P 500 communication services (+0.9%) and financials (+0.9%) sectors were the day’s best-performing sectors. Semiconductor stocks had a field day, rallying on Texas Instruments’ solid results. The Philadelphia Semiconductor Index advanced 3.1%, boosting its year-to-date gain to a staggering 40%.

Conversely, the consumer staples (-0.6%), real estate (-0.1%), and materials (-0.02%) sectors finished lower.

[…]

U.S. Treasury yields finished lower on Wednesday. The 2-yr yield declined one basis point to 1.82%, and the 10-yr yield declined two basis points to 2.05%. The U.S. Dollar Index was unchanged at 97.72. WTI crude lost 1.4% to $55.93/bbl.

[…]

• New home sales increased 7.0% m/m to a seasonally adjusted annual rate of 646,000 (Briefing.com consensus 660,000) from a downwardly revised 604,000 (from 626,000) in May. Sales for April and March were also revised lower.
o The key takeaway from the report is that overall sales activity remains tepid despite the fundamental supports of low mortgage rates, low unemployment, and a tight supply of existing homes for sale.
• The weekly MBA Mortgage Applications Index declined 1.9% following a 1.1% decline in the prior week.