Morning Notes – Thursday August 8, 2019

Directional Bias For The Day:

  • S&P Futures are higher;
  • Near the upper bound of a symmetrical triangle
  • The odds are for a sideways to an up day with elevated volatility – watch for break below 2881.25 for change of fortune
  • Key economic data due:
    • Unemployment Claims (209K vs. 215K est.; pre. 217K) at 8:15 AM
    • Final Wholesale Inventories ( est. 0.2%; pre. 0.2%) at 10:00 AM

Markets Around The World

    • Markets in the East closed mostly higher – Singapore was down
    • European markets are higher
    • Currencies:
Up Down
  • Dollar index
  • GBP/USD
  • USD/CHF
  • AUD/USD
  • NZD/USD
  • EUR/USD
  • USD/JPY
  • USD/CAD
  • USD/INR
  • Commodities:
    Up Down
    • Crude Oil
    • NatGas
    • Copper
    • Palladium
    • Sugar
    • Coffee
    • Cotton
    • Gold
      Silver
    • Platinum
    • Cocoa
  • Bonds
    • 10-yrs yield closed at 1.684%, down from August 6 close of 1.739%;
    • 30-years is at 2.197%, down from 2.269%
    • 2-years yield is at 1.605%, up from 1.597%
    • The 10-Year-&-2-Year spread is at 0.079, down from 0.142

Key Levels:

  • Critical support levels for S&P 500 are 2877.09, 2861.34 and 2846.84
  • Critical resistance levels for S&P 500 are 2892.17, 2898.07 and 2914.11
  • Key levels for eMini futures: break above 2896.50, the high of 2:00 AM and break below 2881.25, the low of 4:00 AM

Pre-Open

  • On Wednesday, at 4:00 PM, S&P future closed at 2883.25 and the index closed at 2883.98 – a spread of about -0.75 points; futures closed at 2880.50 for the day; the fair value is +2.75
  • Pre-NYSE session open, futures are higher – at 8:30 AM, S&P 500 futures were up by +11.25; Dow by +89 and NASDAQ by +40.75

Directional Bias Before Open

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

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

Monthly
  • 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
Weekly:
  • 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
Daily
  • A green bullish engulfing candle following a green harami candle on Tuesday and both within the red real body of Monday
    • %K is above %D; just above 20
    • RSI-9 is turning up just below 40
  • Below 20-day EMA, 50-day EMA and 100-DAY SMA; above 200-day SMA;
  • Uptrend Under Pressure
2-Hour (e-mini future)
    • Continuing the bounce up from a low of 2775.75 at 6:00 PM on Monday; the bounce was interrupted by a drop on Wednesday by 50% from the rise from the lows;  higher since than Wednesday’s high
      • RSI-21 moving around 55 after dropping to 40
      • %K crossing below %D from above 80
    • At/above EMA10 of EMA50, which is above 20-bar EMA
  • Bias: Down-Side
30-Minute (e-mini future)
  • Moving sideways since 9:30 PM near the upper bound of a horizontal channel, which was broken to the downside on Wednesday and the 100% extension target was achieved
    • RSI-21 mostly above 50 since 1:30 PM on August 7
    • %K crossed below %D near 50
    • At/above 20-bar EMA, which is above EMA10 of EMA50
  • Bias: Side
15-Minute (e-mini future)
  • Bollinger Band (20, 2.0) is drifting sideways to up since 1:30 PM on August 7 
  • The Bollinger Band is relatively narrow since 3:15 AM
  • Stochastic (9, 1, 3): %K is below %D below 20
  • Bias: Side

Previous Session

Major U.S. indices closed higher on Wednesday, August 7 in mixed volume. The indices gapped down at the open and then declined more before turning around and closing higher. Most made bullish engulfing candle, which was still within the red real body of Monday.

From Briefing.com:

The stock market staged a big reversal on Wednesday in which the S&P 500 increased 0.1% after being down as much as 2.0% shortly after the open. A steep drop in U.S. Treasury yields contributed to the early sell-off, but selling pressure was abated soon after yields stabilized.

The Nasdaq Composite (+0.4%) also finished higher after beginning sharply lower, while the Dow Jones Industrial Average (-0.1%) and Russell 2000 (-0.1%) finished just below their flat lines.

[…]

Central banks from New Zealand, India, and Thailand cut interest rates sharper than expected on Wednesday with New Zealand’s RBZN Governor indicating that rates may go negative. Negative rates around the world has been a phenomenon that has presumably increased interest in U.S. Treasuries.

[…]

The 2-yr yield finished three basis points lower at 1.58% after touching 1.53% at its low, and the 10-yr yield finished six basis points lower at 1.68% after touching 1.61% at its low. The U.S. Dollar Index finished flat at 97.62. Low rates and growth concerns continued to boost gold ($1505.9/oz, +$33.30, +2.3%), which at one point today provided investors a higher return than the S&P 500 this year.

[…]

• Consumer credit increased by $14.6 bln in June (Briefing.com consensus $16.5 bln) after increasing a revised $17.8 bln (from $17.1 bln) in May.
o The key takeaway from the report is that the June increase in consumer credit was driven entirely by growth in nonrevolving credit, like auto and student loans. This marks a return to a dynamic that was seen earlier this year.
• The weekly MBA Mortgage Applications Index increased 5.3% following a 1.4% decline in the prior week.