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 (0.7% vs. 0.3% est.; prev. 0.4%) at 8:30 AM
- Core Retail Sales (1.0% vs. 0.4% est.; prev. 0.4%) at 8:30 AM
- Philly Fed Manufacturing Index (16.8 vs. 10.1 est.; prev. 21.8) at 8:30 AM
- Empire State Manufacturing Index (4.8 vs. 2.1 est. ; prev. 4.3) at 8:30 AM
- Prelim Nonfarm Productivity (2.3% vs. 1.4% est. ; prev. 3.4%) at 8:30 AM
- Unemployment Claims (220K vs. 212K est.; prev. 209K) 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
- Crude Oil
- 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
- 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
- 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 2871,50, the high of 8:00 AM and break below 2843.00, the low of 7:30 AM
- 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
- 30-Min: Down-Side
- 15-Min: Down-Side
- 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)||
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%.
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.