Morning Notes – Wednesday August 14, 2019

Directional Bias For The Day:

  • S&P Futures are lower;
  • The odds are for a down day with elevated volatility – watch for break above 2907.00 for change of fortune
  • Key economic data due:
    • Import Prices (est. 0.0%; prev. -0.9%) at 8:30 AM

Markets Around The World

    • Markets in the East closed up
    • European markets are lower
    • Currencies:
Up Down
  • Dollar index
  • Commodities:
    Up Down
    • NatGas
    • Gold
    • Silver
    • Sugar
    • Cocoa
    • Crude Oil
    • Copper
    • Palladium
    • Platinum
    • Coffee
    • Cotton
  • Bonds
    • 10-yrs yield closed at 1.680%, up from August 12 close of 1.639%;
    • 30-years is at 2.137%, up from 2.130%
    • 2-years yield is at 1.673%, up from 1.588%
    • The 10-Year-&-2-Year spread is at 0.007, down from 0.051
  • VIX
    • Is at 20.09 up from August 13 close of 17.52; Above 5-day SMA 18.716
    • 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 2889.81, 2877.05 and 2873.14
  • Critical resistance levels for S&P 500 are 2907.58, 2917.02 and 2929.13
  • Key levels for eMini futures: break above 2907.00, the high of 7:30 AM and break below 2875.75, the low of 9:30 AM on August 13


  • On Tuesday, at 4:00 PM, S&P future closed at 2927.25 and the index closed at 2926.32 – a spread of about +1.00 points; futures closed at 2932.00 for the day; the fair value is -4.75
  • Pre-NYSE session open, futures are lower – at 7:45 AM, S&P 500 futures were down by -39.50; Dow by -372 and NASDAQ by -11.75

Directional Bias Before Open

  • Weekly: Uptrend Under Pressure
  • Daily: Uptrend Under Pressure
  • 120-Min:Side
  • 30-Min: Down
  • 15-Min: Down
  • 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 9 was a small green candle near the lows of last week with an upper shadow equal to the real body and a lower shadow equal to five times the real body
    • Retracing from the upper bound of a broadening pattern
    • Stochastic (9,1, 3): %K is below %D; Bearish Divergence
    • RSI (9) is near 50; Bearish Divergence
    • The index bounced off the 89-week SMA during the week of June 7
  • Last week was down -13.40 or -0.5%; the 5-week ATR is 74.98,
  • Last week’s pivot point=2893.16, R1=2964.21, R2=3009.76; S1=2847.61, S2=2776.56; S1/S2 pivot levels were breached
  • A down week; third 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 relatively large bullish engulfing candle with small upper and smaller lower shadow
    • %K crossed above %D near 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)
  • Moving down since 10:00 AM on August 13 after facing resistance at a previous high and the broken uptrend line
    • RSI-21 moving down since 10:00 AM on August 13 from above 70 to below 40; Bearish Divergence
    • %K is crossed below %D from above 80 at 00:00 AM; Bearish Divergence
  • At/below EMA10 of EMA50, which is below 20-bar EMA
  • Bias: Side
30-Minute (e-mini future)
  • Moving down since 10:00 AM on August 13; approaching a congestion zone that it broke above yesterday
    • RSI-21 declining from above 70 at 10:00 AM on August 13 to near 30
    • %K is below %D near 10
    • Below 20-bar EMA, which is below EMA10 of EMA50
  • Bias: Down
15-Minute (e-mini future)
  • Bollinger Band (20, 2.0) is moving down since 4:15 AM
  • The Bollinger Band narrowed from 2:45 PM to 4:00 AM; expanding since with price walking down the lower band
  • Stochastic (9, 1, 3): %K is crisscrossing %D below 20
  • Bias: Down

Previous Session

Major U.S. indices closed higher on Tuesday, August 13. The volume traded was higher than that on Monday but lower than 10-day average. Dow Jones Industrial Average, S&P 500, NASDAQ Composite and Dow Jones Transportation Average made bullish engulfing patterns. Russell 2000, NYSE Composite and Wilshire 5000 Total Market Index made red doji like patterns showing indecision.


U.S. stocks rallied on Tuesday after the White House announced that it will delay the 10% tariff rate for some items imported from China, including cell phones and laptops, until Dec. 15. Apple (AAPL 208.97, +8.49, +4.2%) led the broad-based advance and contributed to the solid gains in the S&P 500 (+1.5%), Dow Jones Industrial Average (+1.4%), and Nasdaq Composite (+2.0%). The Russell 2000 increased 1.1%.


Shorter-dated U.S. Treasuries sold off, driving yields higher in another curve-flattening trade. The 2-yr yield increased nine basis points to 1.67%, and the 10-yr yield increased four basis points to 1.68%. The general risk-on mood helped the market overlook the continued compression in yields. The U.S. Dollar Index advanced 0.5% to 97.82.


• Total CPI increased 0.3% m/m in July, as expected, while core CPI, which excludes food and energy, also increased 0.3% ( consensus 0.2%) for the second straight month. Those readings left total CPI up 1.8% yr/yr, versus 1.6% in June, and core CPI up 2.2% yr/yr, versus 2.1% in June.
o The key takeaway from the report is that it muddles the monetary policy outlook. The year-over-year readings are not exactly “rate-cutting” material, but with everything else going on, the market will be left to conclude that another rate cut is likely since the Fed will want to ensure that everything else going on doesn’t lead to a caustic slide in inflation expectations.
• The NFIB Small Business Optimism Index for July increased to 104.7 from 103.3 in June.

Print Friendly, PDF & Email