Directional Bias For The Day:
- S&P Futures are sharply lower
- The odds are for a down – watch for break above 2895.25 for change of fortune
- Key economic data due:
- Final Service PMI (4est. 52.2; prev. 52.2) at 9:45 AM
- ISM Non-Manufacturing OMI (est. 55.5; prev. 55.1) at 10:00 AM
Markets Around The World
- Markets in the East closed lower
- European markets are lower
- Crude Oil
- 10-yrs yield is at 1.768%, down from August 2 close of 1.855%;
- 30-years is at 2.527%, down from 2.586%
- 2-years yield is at 1.870%, up from 1.854%
- The 10-Year-&-2-Year spread is at 0.151, down from 0.199
- Critical support levels for S&P 500 are 2887.50, 2879.62 and 2874.81
- Critical resistance levels for S&P 500 are 2897.27, 2905.44 and 2914.11
- Key levels for eMini futures: break above 2895.25, the high of 7:00 AM and break below 2882.75, the low of 10:00 AM on June 13
- On Friday, at 4:00 PM, S&P future closed at 2932.00 and the index closed at 2932.05 – a spread of about 0.00 points; futures closed at 2382.50 for the day; the fair value is -0.50
- Pre-NYSE session open, futures are lower – at 9:00 AM, S&P 500 futures were down by -46.25; Dow by -370 and NASDAQ by -158.50
Directional Bias Before Open
- Weekly: Uptrend Under Pressure
- Daily: Uptrend Under Pressure
- 30-Min: Down
- 15-Min: Down
- 6-Min: Down
The trend and patterns on various time frames for S&P 500:
|2-Hour (e-mini future)||
|30-Minute (e-mini future)||
|15-Minute (e-mini future)||
For the week, indices declined sharply in increased volume. All but two S&P sectors, Utilities and Real Estate, closed lower for the week.
Wall Street ended Friday with more losses, as investors remained fixated on possible China tariffs and brushed aside an in-line employment report. The S&P 500 (-0.7%) and Dow Jones Industrial Average (-0.4%) finished well off session lows, while the Nasdaq Composite (-1.3%) and Russell 2000 (-1.1%) fell over 1.0%.
Most of Friday’s decline, however, took place in the first 90 minutes of action. Each of the major averages fell below their 50-day moving averages, which appeared to welcome a buy-the-dip mentality that abated the early selling pressure. The Russell 2000 was the only major U.S. index that closed below the key technical level.
The S&P 500 information technology (-1.7%) and energy (-1.3%) sectors led today’s decline, with the latter unable to benefit from the rebound in oil ($55.74/bbl, +$1.75, +3.2%). The defensive-oriented real estate (+0.8%), consumer staples (+0.1%), and utilities (+0.1%) sectors were the lone sectors that finished higher.
U.S. Treasuries continued to see increased demand, which pushed yields lower in a curve-flattening trade. The 2-yr yield declined one basis point to 1.71%, and the 10-yr yield declined four basis points to 1.86%. The U.S. Dollar Index declined 0.3% to 98.11.
• Job growth was decent in July, wage growth was decent, the unemployment rate stayed near a 50-year low with a slight pickup in the labor force participation rate, and there was a sizable drop in the number of long-term unemployed persons.
o The key takeaway from the report is that it was a good report in aggregate, which means it didn’t offer enough bad news to convince the Fed that it needs to cut the fed funds rate again in September.
• The final July reading for the University of Michigan Index of Consumer Sentiment checked in at 98.4 (Briefing.com consensus 98.6) versus the preliminary reading of 98.2 and the final June reading of 98.2.
o The key takeaway from the report is that the economic uncertainty and trade uncertainty that has bothered the Fed has yet to bother the consumer in a noticeably adverse way.
• The trade deficit for June narrowed slightly to $55.2 billion (Briefing.com consensus -$54.6 billion) from $55.3 billion in May, as imports (-$4.6 billion) fell slightly more than exports (-$4.4 billion).
o The key takeaway from a growth standpoint is that both exports and imports fell in June.
• Factory orders increased 0.6% in June (Briefing.com consensus 0.8%) on the heels of downwardly revised 1.3% decline (from -0.7%) in May, which followed a 1.2% decline in April.
o The key takeaway from the report is that nondefense capital goods orders, excluding aircraft — a proxy for business spending — were revised down to 1.5% from the preliminary report showing a 1.9% increase. Shipments of those same goods were up 0.3% versus 0.6% in the preliminary report. That will compute as a drag in the second estimate for Q2 GDP.