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
    • 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


  • 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:

  • 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 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
  • 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 and 2855.00
    • 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 with 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.


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 ( 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% ( consensus of 2.7%) following a 2.4% increase in May.

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