Morning Notes – Friday August 9, 2019

Directional Bias For The Day:

  • S&P Futures are lower;
  • Drifting down since NYSE close
  • The odds are for a sideways to a down day with elevated volatility – watch for break above 2935.75 for change of fortune
  • Key economic data due:
    • PPI (est. 0.2%; prev. 0.1%) at 8:30 AM
    • Core PPI ( est. 0.2%; pre. 0.3%) at 8:30 AM

Markets Around The World

    • Markets in the East closed mostly higher – Shanghai and Hong Kong were down; Singapore was closed
    • European markets are mostly lower – Switzerland is up
    • Currencies:
Up Down
  • Dollar index
  • Commodities:
    Up Down
    • Crude Oil
    • Gold
    • Silver
    • Palladium
    • Sugar
    • NatGas
    • Copper
    • Platinum
    • Coffee
    • Cotton
    • Cocoa
  • Bonds
    • 10-yrs yield closed at 1.716%, up from August 7 close of 1.684%;
    • 30-years is at 2.232%, up from 2.197%
    • 2-years yield is at 1.617%, up from 1.605%
    • The 10-Year-&-2-Year spread is at 0.099, up from 0.079
  • VIX
    • At 18.53 up from August 8 close of 16.91; Below 5-day SMA 19.90
    • Recent high was 24.81 on August 5; recent low was 11.69 on July 25

Key Levels:

  • Critical support levels for S&P 500 are 2925.31, 2912.77 and 2894.47
  • Critical resistance levels for S&P 500 are 2938.72, 2945.23 and 2964.19
  • Key levels for eMini futures: break above 2930.50, the high of 2:30 AM and break below 2918.00, the low of 7:00 AM


  • On Thursday, at 4:00 PM, S&P future closed at 2939.00 and the index closed at 2938.09 – a spread of about +1.00 points; futures closed at 2940.00 for the day; the fair value is -1.00
  • Pre-NYSE session open, futures are lower – at 7:45 AM, S&P 500 futures were down by -19.25; Dow by -145 and NASDAQ by -66.75

Directional Bias Before Open

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

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 green candle that gapped up at the open; almost no upper and lower shadows; closing the down gap of Monday
    • %K is above %D; above 50
    • RSI-9 is turning up; near 50
  • Below 20-day EMA and 50-day EMA; above 100-DAY SMA and 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; advancing higher in steps; drifting down since 4:00 PM on Thursday from a high of 2940.75, just above the 61.8% retracement of the decline from all time high
      • RSI-21 moving down from above 75 to near 55
      • %K crossing below %D at 4:00 PM on Thursday from above 90
    • Above 20-bar EMA, which is above EMA10 of EMA50
    • Bias: Down-Side
30-Minute (e-mini future)
  • Mostly moving sideways since 12:00 PM on Thursday between 2930.00 and 2920.00;
    • RSI-21 declined from above 70 to just above 50 after making a Bearish Divergence at 4:00 PM
    • %K is crisscrossing %D near 20
    • At/below 20-bar EMA, which is above EMA10 of EMA50
  • Bias: Up-Side
15-Minute (e-mini future)
  • Bollinger Band (20, 2.0) is drifting sideways to down since 3:30 PM on August 8
  • The Bollinger Band narrowed since 0:30 AM
  • Stochastic (9, 1, 3): %K is crisscrossing %D near 30
  • Bias: Up-Side

Previous Session

Major U.S. indices closed higher on Thursday, August 8. The volume traded was lower than that on Wednesday but higher than the 10-day average. The indices gapped up at the open and then climbed higher and closed near the high for the day.


The stock market finished decisively in the green on Thursday, as trade angst subsided and investors embraced a risk-on mindset. The S&P 500 advanced 1.9%, which extended its two-day comeback to 112 points, or 4.0%, from its session low on Wednesday.

The Dow Jones Industrial Average increased 1.4%, the Nasdaq Composite increased 2.2%, and the Russell 2000 increased 2.1%.


Interestingly, the S&P 500 traded just below its 50-day moving average (2934) for most of the afternoon before finally breaking above the key technical level late in the session. The benchmark index held above the level on a closing basis.

All 11 S&P 500 sectors finished higher by at least 1.0%. The energy sector (+2.9%) led the advance as oil prices ($52.52/bbl, +$1.38, +2.7%) rebounded, followed by the information technology (+2.4%), communication services (+2.2%), and consumer discretionary (+2.0%) sectors.


U.S. Treasuries were under noticeable selling pressure today, which sent the 10-yr yield up 11 basis points to 1.79% at one point during the session. Buyers gradually came back, ultimately leaving the benchmark yield up three basis points to 1.72%. The 2-yr yield finished also finished three basis points higher at 1.61%. The U.S. Dollar Index increased 0.1% to 97.60.


• Initial jobless claims for the week ending August 3 decreased by 8,000 to 209,000 ( consensus 213,000). Continuing claims for the week ending July 27 decreased by 15,000 to 1.684 mln.
o The key takeaway from the report is that initial claims continue hovering near multi-decade lows.
• Wholesale inventories were unchanged in June ( consensus 0.2%) on top of an unrevised 0.4% increase in May. Wholesale sales decreased 0.3% in June after decreasing a revised 0.6% (from +0.1%) in May.
o The key takeaway from the June report and the May revision is that the gap between inventory growth and sales growth is widening, which should exert some pressure on prices.







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