Morning Notes – Tuesday August 6, 2019

Directional Bias For The Day:

  • S&P Futures are higher but have recovered only 20% of Monday’s decline
  • The odds are for an up day with elevated volatility – watch for break below 2831.50 for change of fortune
  • Key economic data due:
    • JOLTS Job Openings (est. 7.34M; prev. 7.2M) at 10:00 AM
    • IBD/TIPP Economic Optimism (est. 54.6; prev. 56.6)

Markets Around The World

    • Markets in the East closed mostly lower – Mumbai was up
    • European markets are higher
    • Currencies:
Up Down
  • Dollar index
  • Commodities:
    Up Down
    • Crude Oil
    • NatGas
    • Silver
    • Copper
    • Palladium
    • Platinum
    • Sugar
    • Coffee
    • Cotton
    • Gold
    • Cocoa
  • Bonds
    • 10-yrs yield closed at 1.735%, down from August 2 close of 1.855%;
    • 30-years is at 2.295%, down from 2.392%
    • 2-years yield is at 1.577%, down from 1.713%
    • The 10-Year-&-2-Year spread is at 0.158, up from 0.142

Key Levels:

  • Critical support levels for S&P 500 are 2822.12, 2915.32 and 2800.92
  • Critical resistance levels for S&P 500 are 2852.09, 2859.51 and 2877.43
  • Key levels for eMini futures: break above 2865.00, the high of 7:30 AM and break below 2831.50, the low of 0:30 AM


  • On Monday, at 4:00 PM, S&P future closed at 2844.25 and the index closed at 2844.74 – a spread of about 0.50 points; futures closed at 2830.00 for the day; the fair value is +14.75
  • Pre-NYSE session open, futures are higher – at 8:00 AM, S&P 500 futures were up by +29.25; Dow by +276 and NASDAQ by +90.00

Directional Bias Before Open

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

The trend and patterns on various time frames for S&P 500:

  • Under Pressure
  • July formed a shooting star type doji at all time highs
    • Stochastic is forming a Bearish Divergence
    • RSI-9 is below a downtrend line from January 2018 high; forming a Bearish Divergence
  • June 2019 was a large green Piercing or Bullish Engulfing candle that closed near the open of previous week; May was large Bearish Engulfing candle that closed near the lows
  • 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
  • The week ending on August 2 was a large red bearish engulfing that closed below past five weeks’ close; small lower shadow and almost no upper shadow
    • Retracing from 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 65; potential Bearish Divergence
    • The index bounced off the 89-week SMA during the week of June 7
  • Last week was up -93.81 or -3.1%; the 5-week ATR is 62.48,
  • Last week’s pivot point=2957.26, R1=3000.40, R2=3069.76; S1=2888.90, S2=2845.76; S1/S2/S3 pivot levels were breached
  • A down week; second in last five weeks and fourth 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
  • At/above 10-week EMA; above 39-week SMA and 89-week SMA
  • Uptrend Under Pressure
  • A large red candle with no upper shadow and a lower shadow that is one fifth of the real body
    • %K below %D; near 10
    • RSI-9 is below 20
  • Below 20-day EMA, 50-day EMA and 100-DAY SMA; above 200-day SMA;
  • Uptrend Under Pressure
2-Hour (e-mini future)
    • Bouncing up from a low of 2775.75 at 6:00 PM; up 75 points since; declined more than 100 on Monday
      • RSI-21 moving up from a low of 5.88 and 6:00 PM
      • %K crossed above %D at 8:00 PM
    • At/below 20-bar EMA, which is below EMA10 of EMA50
  • Bias: Down
30-Minute (e-mini future)
  • Bouncing up since 7:30 PM
    • RSI-21 has risen from low near 20 to above 50
    • %K crisscrossing around 80
    • Above EMA10 of EMA50, which is above 20-bar EMA
  • Bias: Down-Side
15-Minute (e-mini future)
  • Bollinger Band (20, 2.0) is drifting up since 11:30 PM
  • The Bollinger Band is relatively narrow but still large; price walking up the upper band
  • Stochastic (9, 1, 3): %K crossed below %D at 7:45 AM
  • Bias: Down-Side

Previous Session

Major U.S. indices closed sharply lower on Monday, August 5 in higher volume. The indices gapped down at the open and then declined for most of the day.


The stock market had its worst day of 2019 with each of the major U.S. indices losing around 3% on Monday. Trade and growth concerns rattled capital markets after China devalued the yuan to its weakest level against the dollar since 2008. Broad-based selling left the S&P 500 down 3.0% for the day.

The Dow Jones Industrial Average fell 2.9%, the Nasdaq Composite fell 3.5%, and the Russell 2000 fell 3.0%.


On a related note, all of Germany’s sovereign debt yielded negative rates for the first time on Monday.

The 2-yr yield dropped 13 basis points to 1.58%, and the 10-yr yield dropped 12 basis points to 1.74%. The U.S. Dollar Index fell 0.5% to 97.58. WTI crude lost 2.0% to $54.64/bbl.

Separately, gold futures settled 1.2% higher at $1467.20/oz, further helped by weakness in the dollar and declining U.S. Treasury yields. Shares of Newmont Goldcorp (NEM 37.42, +0.51) advanced 1.4%.


• The ISM Non-Manufacturing Index decreased to 53.7% in July ( consensus 55.4) from 55.1% in June. The dividing line between expansion and contraction is 50.0%.
o The key takeaway from the report is that it shows a continuation of a decelerating trend that has been in place since late 2018. The Non-Manufacturing Index is at its lowest level in almost three years.
Looking ahead, investors will receive the JOLTS – Job Openings report for June on Tuesday.





Print Friendly, PDF & Email