Directional Bias For The Day:
- S&P Futures are lower;
- The odds are for a down day with elevated volatility – watch for break above 2880.75 and 2883.25 for change of fortune
- Key economic data due:
- CPI (0.3% vs. 0.3% est.; prev. 0.1%) at 8:30 AM
- Core CPI (0.3% vs. 0.2% est.; prev. 0.3%) at 8:30 AM
Markets Around The World
- Markets in the East closed down
- European markets are lower
- Crude Oil
- 10-yrs yield closed at 1.639%, down from August 9 close of 1.734%;
- 30-years is at 2.130%, down from 2.248%
- 2-years yield is at 1.588%, down from 1.637%
- The 10-Year-&-2-Year spread is at 0.051, down from 0.097
- Is at 21.39 up from August 12 close of 21.09; Above 5-day SMA 19.37
- Recent high was 24.81 on August 5; recent low was 11.69 on July 25
- Critical support levels for S&P 500 are 2873.14, 2861.34 and 2846.84
- Critical resistance levels for S&P 500 are 2883.13, 2902.55 and 2907.07
- Key levels for eMini futures: break above 2880.75, the high of 7:00 AM and break below 2866.75, the low of 5:30 AM
- On Monday, at 4:00 PM, S&P future closed at 2883.50 and the index closed at 2883.09 – a spread of about +0.50 points; futures closed at 2880.25 for the day; the fair value is +3.25
- Pre-NYSE session open, futures are lower – at 8:00 AM, S&P 500 futures were down by -8.25; Dow by -77 and NASDAQ by -29.75
Directional Bias Before Open
- Weekly: Uptrend Under Pressure
- Daily: Uptrend Under Pressure
- 30-Min: Down
- 15-Min: Down
- 6-Min: Side-Choppy
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)||
Major U.S. indices closed lower on Monday, August 12. The volume traded was lower than that on Friday and the 10-day average. Most indices gapped down from the previous red harami candle and closed below Thursday’s big green candle.
The stock market fell more than 1% on Monday, as uncertainties about the global economy continued to push investors away from risk assets and into safe-haven assets like U.S. Treasuries and gold. The S&P 500 fell 1.2%, which was comparable to the declines in the Nasdaq Composite (-1.2%) and Russell 2000 (-1.2%). The Dow Jones Industrial Average lost 1.5%.
This compression in yields not only hit investor sentiment but was also affected the S&P 500 financials sector (-1.9%), which led all 11 S&P 500 sectors in losses. Banks typically rely on healthy net interest margins to boost profit and facilitate lending activity. The other rate-sensitive sectors — real estate (-0.3%) and utilities (-0.3%) — outperformed but still finished lower.
The spread between the 2-yr and 10-yr yields narrowed to six basis points, as demand for longer-dated tenors continued to climb amid growth concerns. The 2-yr yield fell five basis points to 1.58%, and the 10-yr yield fell ten basis points to 1.64%. The U.S. Dollar Index declined 0.1% to 97.43.
• The Treasury Budget for July showed a deficit of $119.70 bln (Briefing.com consensus -$100.00 bln) versus a deficit of $76.87 bln for the same period one year ago. The Treasury Budget is not seasonally adjusted, so the July deficit cannot be compared to the $8.50 bln deficit in June.
o The fiscal year-to-date deficit is $866.81 bln versus a deficit of $683.96 bln in the same period a year ago. The budget deficit over the last 12 months is $961.8 bln, versus $919 bln for the 12 months ending in June.