Morning Notes – Thursday August 15, 2019

Directional Bias For The Day:

  • S&P Futures are higher;
  • The odds are for a highly volatile and choppy day
  • Key economic data due:
    • Retail Sales (est. 0.3%; prev. 0.4%) at 8:30 AM
    • Core Retail Sales (est. 0.4%; prev. 0.4%) at 8:30 AM
    • Philly Fed Manufacturing Index (est. 10.1; prev. 21.8) at 8:30 AM
    • Empire State Manufacturing Index (est. 2.1; prev. 4.3) at 8:30 AM
    • Prelim Nonfarm Productivity (est. 1.4%; prev. 3.4%) at 8:30 AM
    • Unemployment Claims (est. 212K; prev. 09K) at 8:30 AM

Markets Around The World

    • Markets in the East were mixed – Shanghai and Hong Kong were up; Tokyo, Sydney and Singapore were down; Mumbai and Seoul were closed
    • European markets are lower – Italy is closed
    • Currencies:
Up Down
  • EUR/USD
  • GBP/USD
  • USD/JPY
  • USD/CHF
  • AUD/USD
  • USD/INR
  • Dollar index
  • NZD/USD
  • USD/CAD
  • Commodities:
    Up Down
    • NatGas
    • Palladium
    • Coffee
    • Cotton
    • Crude Oil
    • Gold
    • Silver
    • Copper
    • Platinum
    • Sugar
    • Cocoa
  • Bonds
    • 10-yrs yield closed at 1.581%, down from August 13 close of 1.680%;
    • 30-years is at 2.025%, down from 2.137%
    • 2-years yield is at 1.579%, down from 1.673%
    • The 10-Year-&-2-Year spread is at 0.002, down from 0.007
  • VIX
    • Is at 22.22 up from August 14 close of 22.10; Above 5-day SMA 20.18
    • 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 2839.89, 2825.71 and 2822.12
  • Critical resistance levels for S&P 500 are 2856.96, 2866.62 and 2881.25
  • Key levels for eMini futures: break above 2671,50, the high of 8:00 AM and break below 2843.00, the low of 7:30 AM

Pre-Open

  • On Wednesday, at 4:00 PM, S&P future closed at 2841.25 and the index closed at 2840.60 – a spread of about +0.50 points; futures closed at 2840.75 for the day; the fair value is +0.50
  • Pre-NYSE session open, futures are higher – at 7:45 AM, S&P 500 futures were up by +15.75; Dow by +113 and NASDAQ by +39.00

Directional Bias Before Open

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

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 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
Daily
  • A large red candle that gapped down at the open; almost no upper and lower shadows
    • %K crossed below %D; below 20
    • RSI-9 turned down; below 35
  • Below 20-day EMA, 50-day EMA, 100-DAY SMA; above 200-day SMA;
  • Uptrend Under Pressure
2-Hour (e-mini future)
  • Bouncing up after making lows near 2817.75 in choppy manner;
    • RSI-21 moving up since 4:00 PM; made a Bullish Divergence at 6:00 AM
    • %K is crisscrossing %D higher since 4:00 PM
  • Below 20-bar EMA, which is below EMA10 of EMA50
  • Bias: Side-Down
30-Minute (e-mini future)
  • Moving sideways in choppy manner since 12:30 PM on Wednesday
    • RSI-21 rising from oversold levels; Bullish Divergence at 6:30 AM; price up by 30 point since
    • %K is above %D
    • At/below 20-bar EMA, which is below EMA10 of EMA50
  • Bias: Down-Side
15-Minute (e-mini future)
  • Bollinger Band (20, 2.0) is moving sideways to up since 9:15 PM
  • The Bollinger Band was relatively narrow from 8:30 PM to 5:00 AM; expanding since with price first walked down the lower band and then bounced up to the middle band
  • Stochastic (9, 1, 3): %K is above %D below 80
  • Bias: Down-Side

Previous Session

Major U.S. indices closed lower on Wednesday, August 14. The volume traded was higher than previous day and the 10-day average. Indices gapped down at the open and then declined for most of teh day.

From Briefing.com:

Each of the major U.S. indices lost around 3.0% on Wednesday, as weak global data and a recessionary signal in the U.S. Treasury market sent stocks reeling. Broad-based selling left both S&P 500 and Russell 2000 down 2.9%. The Dow Jones Industrial Average lost 3.1%, and the Nasdaq Composite lost 3.0%.
T

[…]

In turn, the yield on the 10-yr note fell below the yield on the 2-yr note for the first time since 2007, representing an inversion that has preceded each recession since 1980. The average length of time between the first inversion and the start of each recession since 1980 has averaged 18 months, with the range being as little as ten months to as many as two years.

[…]

• Import prices rose 0.2% m/m in July, but declined 0.1% excluding fuel. On a yr/yr basis, all import prices were down 1.8%, versus up 4.8% for the 12 months ending in July 2018, while nonfuel import prices declined 1.3% versus a 1.4% increase for the 12 months ending in July 2018.
• Export prices were up 0.2% m/m in July. Excluding agricultural exports, prices were also up 0.2%. On a yr/yr basis, all export prices were down 0.9%, versus up 4.3% for the 12 months ending in July 2018, while nonagricultural export prices were down 1.5%, versus up 5.0% for the 12 months ending in July 2018.
o The key takeaway from the report is that it doesn’t show any inflation, which stands in contrast to the Consumer Price Index for July. Accordingly, it will only serve to confuse the market’s perspective on the Fed’s read of inflation trends.
• The weekly MBA Mortgage Applications Index spiked 21.7% following a 5.3% increase in the prior week.