Morning Notes – Tuesday September 3, 2019

Directional Bias For The Day:

  • S&P Futures are lower;
  • The odds are for a down day – watch for break above 2913.75 for change of fortune
  • Key economic data due:
    • ISM Manufacturing PMI ( 51.2 est.; prev. 51.2 ) at 10:00 AM
    • Construction Spending  (0.3% est.; prev. -1.3%) at 10:00 AM
    • ISM Manufacturing Prices ( 47.6 est. ; prev. 45.1 ) at 10:00 AM
    • IBD/TIPP Economic Optimism ( 55.4 est.; prev. 55.1)

Markets Around The World

    • Markets in the East closed mixed – Shanghai, Tokyo and Singapore closed up; Hong Kong, Sydney, Mumbai and Seoul closed down
    • European markets are lower
    • Currencies:
Up Down
  • Dollar index
  • AUD/USD
  • USD/CHF
    • EUR/USD
    • GBP/USD
    • USD/JPY
    • USD/CHF
    • NZD/USD
  • Commodities:
    Up Down
    • NatGas
    • Gold
    • Silver
    • Platinum
    • Sugar
    • Crude Oil
    • Copper
    • Palladium
    • Coffee
    • Cotton
    • Cocoa
  • Bonds
    • 10-yrs yield closed at 1.489%, down from August 29 close of 1.516%;
    • 30-years is at 1.954%, down from 1.979%
    • 2-years yield is at 1.512%, down from 1.528%
    • The 10-Year-&-2-Year spread is at -0.023 down from -0.015
  • VIX
    • Is at 19.79, below day’s open, up from August 30 close of 18.98; above 5-day SMA 19.26
    • Recent high was 21.64 on August 28; recent low was 15.51 on August 21

Key Levels:

  • Critical support levels for S&P 500 are 2905.67, 2898.79 and 2890.03
  • Critical resistance levels for S&P 500 are 2913.32, 2916.21 and 2926.46
  • Key levels for eMini futures: break above 2913.75, the high of 2:00 AM and break below 2901.50, the low of 7:40 AM

Pre-Open

  • On Friday, at 4:00 PM, S&P future closed at 2923.25 and the index closed at 2926.46 – a spread of about -3.00 points; futures closed at 2924.75 for the day; the fair value is -1.50
  • Pre-NYSE session open, futures are lower – at 8:30 AM, S&P 500 futures were up by -15.75; Dow by -168 and NASDAQ by +34.75

Directional Bias Before Open

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

The trend and patterns on various time frames for S&P 500:

Monthly
  • Under Pressure
  • August was a red candle with small upper shadow and long lower shadow
    • Stochastic is forming a Bearish Divergence
    • RSI-9 is below a downtrend line from January 2018 high; forming a Bearish Divergence
  • 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 30 was a green with small shadows
    • Retracing from the upper bound of a broadening pattern
    • Stochastic (9,1, 3): %K is crossing above %D; near 50
    • RSI (9) is turning up and just above 50
  • Last week was down +79.35 or +2.%; the 5-week ATR is 108.72
  • Last week’s pivot point=2906.65, R1=2960.24, R2=2994.03; S1=2872.86, S2=2819.27; R1 pivot level was breached
  • An up week; first 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; last swing high 3027.98 during the week of July 22
  • Below 10-week EMA; above 39-week SMA and 89-week SMA
  • Uptrend Under Pressure
Daily
  • A red candle that gapped up at the open but the gap was closed; small upper shadow; longer lower shadow
    • %K is above %D near 85
    • RSI-9 turning up and is above 50
  • Above 50-day EMA, 100-day SMA, 20-DAY EMA; above 200-day SMA;
  • Uptrend Under Pressure
2-Hour (e-mini future)
  • Drifted down from the upper limit of a horizontal channel near 2944.00 to near 2900.00
    • RSI-21 has declined from a high of 81.73 to near 45
    • %K is crossing above %D from near 30
  • Below 20-bar EMA, which is at/below EMA10 of EMA50
  • Bias: Up-Side
30-Minute (e-mini future)
  • Drifting down from a high of 246.50 at 5:30 AM on August 30 to near 2900.00
    • RSI-21 is moving between 40 and 50 since 10:30 AM on August 30
    • %K is crisscrossing %D around 50
    • 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 down since 11:00 PM on September 1
  • The Bollinger Band was relatively narrow from 9:45 PM tp 2:45 AM; expanding since slightly
  • Stochastic (9, 1, 3): %K is below %D near 80
  • Bias: Down-Side

Previous Session

Major U.S. indices closed mixed on Friday, August 30 in mixed volume. NASDAQ Composite and Russell 2000 closed down. Dow Jones Transportation  Average and Russell 2000 traded in lower volume. Most indices closed below their open.

For the week, the major U.S. indices closed higher in mixed volume. All S&P 500 closed higher for the week.

From Briefing.com:

The stock market finished little changed on Friday in a lackluster session before the holiday weekend. The S&P 500 (+0.1%) and Dow Jones Industrial Average (+0.2%) finished just above their flat lines, while the Nasdaq Composite (-0.1%) and Russell 2000 (-0.1%) finished slightly lower.

[…]

U.S. Treasuries finished slightly higher in a muted session. The 2-yr yield declined two basis points to 1.50%, and the 10-yr yield declined one basis point to 1.51%. The U.S. Dollar Index advanced 0.3% to 98.81.

[…]

• Personal income increased 0.1% m/m in July (Briefing.com consensus +0.4%), which was weaker than expected thanks to a 1.8% decline in personal interest income, but personal spending increased a stronger-than-expected 0.6% (Briefing.com consensus +0.5%). The PCE Price Index and core PCE Price Index, which excludes food and energy, were both up 0.2%, which was also expected.
o The key takeaway from the report is that consumer spending is solid and inflation is stable, albeit at below-target levels. All in all, there isn’t a lot of ammunition in the report for the Fed to fire off a 50-basis points rate cut at its September meeting.
• The final reading for the University of Michigan’s Index of Consumer Sentiment for August was revised down to 89.8 (Briefing.com consensus 92.4) from the preliminary reading of 92.1. The final reading for July was 98.4. The difference in final readings between July and June was the largest point drop since December 2012.
o The key takeaway from the report is the understanding that tariff issues are weighing more heavily on consumer sentiment, which threatens to temper discretionary spending activity in the months ahead.
• The Chicago PMI increased to 50.4 in August (Briefing.com consensus 48.2) from 44.4 in July.

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