Morning Notes – Tuesday July 30, 2019

Directional Bias For The Day:

  • S&P Futures are lower; declining rapidly since 10:30 PM on Monday
  • The odds are for a down day – watch for break above 3016.25 for change of fortune
  • Watch for emerging Stochastic Bearish Divergence on daily charts
  • Key economic data due:
    • Core PCE Price Index (est. 0.2%; prev. 0.2%) at 8:30 AM
    • Personal Spending (est. 0.3%; prev. 0.4%) at 8:30 AM
    • Personal Income (est. 0.4%; prev. 0.5%) at 8:30 AM
    • S&P/CS Composite-20-HPI (est. 2.4%; prev. 2.5%) at 9:00 AM
    • CB Consumer Confidence (est. 125.1; prev. 121.5) at 10:00 AM
    • Pending Home Sales (est. 0.5%; prev. 1.1%) at 10:00 AM

Markets Around The World

    • Markets in the East closed mostly higher – Mumbai closed down
    • European markets are lower
    • Currencies:
Up Down
  • Dollar index
  • EUR/USD
  • USD/CAD
  • USD/INR
  • GBP/USD
  • USD/JPY
  • USD/CHF
  • AUD/USD
  • NZD/USD
  • Commodities:
    Up Down
    • Crude Oil
    • Gold
    • Silver
    • Plainum
    • Sugar
    • NatGas
    • Copper
    • Palladium
    • Coffee
    • Cotton
    • Cocoa
  • Bonds
    • 10-yrs yield is at 2.055%, down from July 26 close of 2.081%;
    • 30-years is at 2.583%, down from 2.601%
    • 2-years yield is at 1.838%, down from 1.854%
    • The 10-Year-&-2-Year spread is at 0.212, down from 0.227

Key Levels:

  • Critical support levels for S&P 500 are 301.30, 3008.56 and 2999.45
  • Critical resistance levels for S&P 500 are 3023.06, 3027.98 and 3031.60
  • Key levels for eMini futures: break above 3016.25, the high of 5:30 AM and break below 3007.00, the low of 7:30 AM

Pre-Open

  • On Monday, at 4:00 PM, S&P future closed at 3021.50 and the index closed at 3020.97 – a spread of about +0.50 points; futures closed at 3021.75 for the day; the fair value is -0.25
  • Pre-NYSE session open, futures are lower – at 8:00 AM, S&P 500 futures were down by -14.75; Dow by -96 and NASDAQ by -61.25

Directional Bias Before Open

  • Weekly: Uptrend resumed
  • Daily: Uptrend
  • 120-Min:Up-Side
  • 30-Min: Side-Down
  • 15-Min: Side-Down
  • 6-Min: Down

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 small doji like red candle with small lower and smaller upper lower shadows; at all tie highs
    • %K turning down but above %D above 80; potential Bearish Divergence
    • RSI-9 is turning down 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 down since 2:00 PM on July 26; broke below a symmetrical triangle near the highs
    • RSI-21 declined to below 25 from above 70 on Friday
    • %K crossed below %D at 0:00 AM
    • Below EMA10 of EMA50, which is below 20-bar EMA
  • Bias: Up-Side
30-Minute (e-mini future)
  • Moving down since 3:30 PM on July 26; broke below an uptrend line from July 19 lows
    • RSI-21 has moved down from above 70 on Friday to below 30
    • %K crisscrossing %D lower; near 10
    • Below 20-bar EMA, which is below EMA10 of EMA50
  • Bias: Side-Down
15-Minute (e-mini future)
  • Bollinger Band (20, 2.0) is drifting sideways to down since 4:30 PM on Friday
  • The Bollinger Band was mostly narrow from 4:30 PM on Friday to 2:30 AM; expanding since with price walking down the lower band
  • Stochastic (9, 1, 3): %K is below %D since 7:0 AM;
  • Bias: Side-Down

Previous Session

Major U.S. indices closed mostly lower on Monday, July 29 in mixed volume. Dow Jones Industrial Average and NASDAQ Composite traded in higher volume.

From Briefing.com:

The S&P 500 lost 0.2% on Monday, slipping from record highs in a lackluster session. The Nasdaq Composite (-0.4%) and Russell 2000 (-0.6%) both underperformed, while the Dow Jones Industrial Average (+0.1%) managed to finish higher.

Monday’s session didn’t include much price action, as investors appeared to be waiting for several key events later this week. Some of these events will include the FOMC’s rate decision, U.S.-China trade talks, the July employment report, and Apple’s (AAPL 209.68, +1.94, +0.9%) earnings report.

[…]

In turn, the S&P 500 consumer discretionary (-0.6%) and communication services (-0.5%) sectors were among today’s laggards but, like the broader market, finished the session off intraday lows.

The S&P 500 financials sector (-0.8%) succumbed to broad-based selling interest throughout the day.

[…]

On the other hand, the S&P 500 defensive-oriented sectors — utilities (+0.5%), real estate (+0.5%), health care (+0.4%), and consumer staples (+0.3%) — were the lone sectors that finished higher.

[…]

U.S. Treasuries finished the session higher, pushing yields lower across the curve. The 2-yr yield and the 10-yr yield declined three basis points each to 1.84% and 2.06%, respectively. The U.S. Dollar Index finished flat at 98.04. WTI crude increased 1.2% to $56.87/bbl.

[…]