Morning Notes – Wednesday August 28, 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 2878.00 for change of fortune
  • The 61.8% Fibonacci retracement of the big decline on Friday – from 2936.50 to 2810.25 – is achieved near 2888.00; the 78.6% Fibonacci retracement is near 2909.00 after a resistance level near 2901.00
  • No key economic data due:

Markets Around The World

    • Markets in the East closed mixed – Shanghai, Hong Kong, Mumbai and Singapore closed down; Tokyo, Sydney and Seoul closed up
    • European markets are lower
    • Currencies:
Up Down
  • Dollar index
  • USD/JPY
  • USD/CHF
  • USD/CAD
  • USD/INR
    • EUR/USD
    • GBP/USD
    • AUD/USD
    • NZD/USD

 

  • Commodities:
    Up Down
    • Crude Oil
    • NatGas
    • Gold (Unch.)
    • Silver
    • Copper
    • Platinum
    • Coffee
    • Cotton
    • Palladium
    • Sugar
    • Cocoa
  • Bonds
    • 10-yrs yield is at 1.463%, down from August 27 close of 1.490%;
    • 30-years is at 1.920%, down from 1.969%
    • 2-years yield is at 1.500%, down from 1.536%
    • The 10-Year-&-2-Year spread is at -0.037 up from -0.046
  • VIX
    • Is at 21.24 up from August 27 close of 20.31; Above 5-day SMA 19.48
    • Recent high was 24.10 on August 15; recent low was 15.51 on August 21

Key Levels:

  • Critical support levels for S&P 500 are 2867.41, 2860.59 and 2856.00
  • Critical resistance levels for S&P 500 are 2875.79, 2881.28 and 2898.79
  • Key levels for eMini futures: break above 2869.50, the high of 7:00 AM and break below 2854.25, the low of 8:00 AM

Pre-Open

  • On Tuesday, at 4:00 PM, S&P future closed at 2868.00 and the index closed at 2879.16 – a spread of about -1.25 points; futures closed at 2865.50 for the day; the fair value is +2.50
  • Pre-NYSE session open, futures are lower – at 9:00 AM, S&P 500 futures were down by -3.75; Dow by -38 and NASDAQ by -15.75

Directional Bias Before Open

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

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 23 was a large red Bearish Engulfing with small shadows
    • Retracing from the upper bound of a broadening pattern
    • Stochastic (9,1, 3): %K is below %D; falling near 30
    • RSI (9) is near 40 and falling
  • Last week was down -41.57 or -1.4%; the 5-week ATR is 100.33
  • Last week’s pivot point=2873.72, R1=2912.47, R2=2997.83; S1=2808.36, S2=2769.61; No pivot levels were breached
  • A down week; fourth in a row and fourth in last five weeks and sixth 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
  • Below 10-week EMA; above 39-week SMA and 89-week SMA
  • Uptrend Under Pressure
Daily
  • A near bearish engulfing candle with small shadows
    • %K is below %D near 30
    • RSI-9 turning down near 40
  • Below 20-day EMA, 50-day EMA and 100-DAY SMA; above 200-day SMA;
  • Uptrend Under Pressure
2-Hour (e-mini future)
  • Moving sideways to down; near the middle of a horizontal channel between 2810.00 and 2940.00;
    • RSI-21 is declining near 30
    • %K is crisscrossing %D near 30
  • Below 20-bar EMA, which is below EMA10 of EMA50
  • Bias: Side
30-Minute (e-mini future)
  • Moving sideways to down near the lower bound of a horizontal channel between 2899.00 an d2855.00
    • RSI-21 has declined below 40
    • %K is crisscrossing %D lower
    • Below 20-bar EMA, which is below EMA10 of EMA50
  • Bias: Side-Down
15-Minute (e-mini future)
  • Bollinger Band (20, 2.0) is moving sideways to down since 4:30 PM
  • The Bollinger Band was narrow from 4:30 PM to 7:00 AM; expanding since wit price walking down the lower band
  • Stochastic (9, 1, 3): %K is crisscrossing %D near 20
  • Bias: Side-Down

Previous Session

Major U.S. indices closed lower on Tuesday, August 27 in mostly higher volume that was lower than 10-day average. S&P 500 traded in lower volume. Most indices made bearish engulfing over small harami patterns with small shadows.

From Briefing.com:

The stock market finished lower on Tuesday in a shaky session. The S&P 500 jumped 0.7% out of the gate after yesterday’s advance, then declined as much 0.6% as Treasury yields took a noticeable leg lower. The broader market spent most of the afternoon wavering in negative territory, leaving the S&P 500 with a 0.3% loss.

The Dow Jones Industrial Average (-0.5%) and Nasdaq Composite (-0.3%) performed similarly to the benchmark index. The Russell 2000 dropped 1.4%, largely due to weakness in many of the energy and financial stocks.

[…]

Specifically, the 2s10s spread inversion widened to four basis points, which isn’t terribly conducive for lending activity. The 2-yr yield declined two basis points to 1.53%, and the 10-yr yield declined six basis points to 1.49%. The U.S. Dollar Index was little changed at 98.04. WTI crude rose 2.4% to $54.90/bbl.

[…]

• The Conference Board’s Consumer Confidence Index for August printed at 135.1 (Briefing.com consensus 129.6) versus an upwardly revised 135.8 (from 135.7) in July, which was the third highest reading since October 2000.
o The key takeaway from the report is that it reflects a pretty solid state of consumer confidence, which is a supportive foundation for continued discretionary spending. That matters greatly for an economy driven predominantly by consumer spending.
• The FHFA Housing Price Index for June increased 0.2% following a revised 0.2% increase in May (from 0.1%).
• The S&P Case-Shiller Home Price Index for June increased 2.1% (Briefing.com consensus of 2.7%) following a 2.4% increase in May.