Morning Notes – Monday July 29, 2019

Directional Bias For The Day:

  • S&P Futures are little changed; drifting sideways since 4:00 PM on Friday;
  • The odds are for a sideways to down day – watch for break below 3027.25 for change of fortune
  • Watch for emerging Stochastic Bearish Divergence on daily charts
  • No key economic data due: 

Markets Around The World

    • Markets in the East closed mostly lower – Sydney closed up
    • European markets are mostly higher – Spain and Italy are down
    • Currencies:
Up Down
  • Dollar index
  • EUR/USD
  • GBP/USD
  • USD/JPY
  • USD/CHF
  • AUD/USD
  • NZD/USD
  • USD/CAD
  • USD/INR
  • Commodities:
    Up Down
    • Crude Oil
    • Gold
    • Silver
    • Copper
    • Platinum
    • Sugar
    • NatGas
    • Palladium
    • Coffee
    • Cotton
    • Cocoa
  • Bonds
    • 10-yrs yield is at 2.053%, down from July 26 close of 2.081%;
    • 30-years is at 2.578%, down from 2.601%
    • 2-years yield is at 1.846%, down from 1.854%
    • The 10-Year-&-2-Year spread is at 0.207, down from 0.227

Key Levels:

  • Critical support levels for S&P 500 are 3021.78, 3015.18 and 3012.59
  • Critical resistance levels for S&P 500 are 3027.98, 3031.53 and 3037.53
  • Key levels for eMini futures: break above 3037.25, the high of 7:30 AM and break below 3022.00, the low of 6:30 AM

Pre-Open

  • On Friday, at 4:00 PM, S&P future (June contract) closed at 3026.75 and the index closed at 3025.86 – a spread of about +1.00 points; futures closed at 3024.50 for the day; the fair value is +2.50
  • Pre-NYSE session open, futures are slightly higher – at 9:00 AM, S&P 500 futures were up by +0.75; Dow by +17 and NASDAQ by +5.75

Directional Bias Before Open

  • Weekly: Uptrend resumed
  • Daily: Uptrend
  • 120-Min:Up
  • 30-Min: Up
  • 15-Min: 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 26 was a large green candle near the upper bound of a broadening pattern; all time highs
    • At the upper bound of a broadening pattern
    • Stochastic (9,1, 3): %K crossed above %D above 90; potential Bearish Divergence for %D
    • RSI (9) is turning up from just below 70; potential Bearish Divergence
    • The index bounced off the 89-week SMA during the week of June 7
  • Last week was up +49.25 or +1.7%; the 5-week ATR is 51.37, higher than previous week
  • Last week’s pivot point=3010.16, R1=3043.68, R2=3061.49; S1=2992.35, S2=2958.83; R1 pivot level was breached
  • An up week; third in last five weeks and sixth 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; at all tie highs
    • %K crossed above %D above 80; potential Bearish Divergence
    • RSI-9 is turning up near 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; declined early on July 25 but resumed the rise at 2:00 PM ;
    • RSI-21 moving 60
    • %K crossed above %D at 400 AM on Monday
    • Above 20-bar EMA, which is above EMA10 of EMA50
  • Bias: Up
30-Minute (e-mini future)
  • Moving up since 12:30 PM on July 25 after declining earlier in the day;
    • RSI-21 is moving around 55-60 since 2:30 AM
    • %K crisscrossing %D around 60
    • Above 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 up since 9:30 PM
  • The Bollinger Band narrowed from 10:30 AM to 2:45 AM; expanding since
  • Stochastic (9, 1, 3): %K is below %D since 7:45 AM;
  • Bias: Side

Previous Session

Major U.S. indices closed higher on Friday, July 26 in lower volume. S&P 500 and NASDAQ Composite made all time highs. Dow Jones Industrial Average, NYSE Composite and Wilshire 5000 Total Market Index are near their respective all time highs. Dow Jones Transportation Average and Russell 2000 quite off their highs.

For the wee, major indices closed higher but in mixed volume. Only tow S&P sectors – Energy and Utility – closed lower for the week.

From Briefing.com:

The stock market wrapped up the week on a high note, as upbeat results from Alphabet (GOOG 1250.41, +118.29, +10.5%) and encouraging Q2 GDP data helped lift the S&P 500 (+0.7%) and Nasdaq Composite (+1.1%) to record closes. The Russell 2000 rose 1.1%, while the Dow Jones Industrial Average increased just 0.2%.

[…]

The S&P 500 communication services sector (+3.3%), which is home to Alphabet and Twitter, nearly tripled the advance in the runner-up consumer staples sector (+1.2%). Laggards included energy (-0.5%) and industrials (-0.2%), although losses were modest.

[…]

U.S. Treasuries finished the session with slight losses, pushing yields higher. The 2-yr yield increased two basis points to 1.87%, and the 10-yr yield increased one basis point to 2.08%. The U.S. Dollar Index advanced 0.2% to 98.01. WTI crude increased 0.3% to $56.19/bbl.

[…]

• According to the BEA, the advance estimate showed Q2 real GDP increased at a seasonally adjusted annual rate of 2.1% (Briefing.com consensus 1.8%) following a 3.1% increase in the first quarter. The GDP Price Deflator was up 2.4% (Briefing.com consensus 1.8%) after increasing 1.1% in the first quarter.
o The key takeaway from the report is that it revealed some impressive strength in the U.S. consumer, evidenced by the 4.3% growth in personal consumption expenditures (PCE), which was the second highest over the past 16 quarters. PCE contributed 2.85 percentage points to Q2 GDP growth.