Morning Notes – Friday October 25, 2019

Directional Bias For The Day:

  • S&P Futures are lower;
  • The odds are for a sideways to an up day – watch for break below 3000.00 for change of fortune
  • Key economic data due:
    • Revised UoM Consumer Sentiment  ( 96.0 est.; prev. 96.0) at 10:00 AM
    • Revised UoM Inflation Expectations  (  prev. 2.5%) at 10:00 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 3001.82, 2993.83 and 2991.21
  • Critical resistance levels for S&P 500 are 3012.01, 3016.07 and 3021.99
  • Key levels for eMini futures: break above 3008.25, the high of 6:30 AM and break below 3000.00, the low of 7:00 PM


  • On Thursday, at 4:00 PM, S&P future closed at 3008.50 and the index closed at 3010.29 – a spread of about -1.75 points; futures closed at 3004.25 for the day; the fair value is +4.25
  • Pre-NYSE session open, futures are mixed – at 9:15 AM, S&P 500 futures were down by -2.25; Dow down by up -48 and NASDAQ up by +3.25

Markets Around The World

  • Markets in the East closed mostly higher – Hong Kong was down
  • European markets are mixed – Germany, U.K and STOXX 600 are lower; France, Spain, Italy and Switzerland are higher
  • Currencies:
    Up Down
    • Dollar index
    • USD/CHF
    • AUD/USD
    • EUR/USD
    • GBP/USD
    • USD/JPY
    • NZD/USD
    • USD/CAD
    • INR/USD
  • Commodities:
    Up Down
    • Gold
    • Silver
    • Copper
    • Platinum
    • Palladium
    • Sugar
    • Coffee
    • Cotton
    • Crude Oil
    • NatGas
    • Cocoa
  • Bonds
    • 10-yrs yield closed at 1.766%, up from October 23 close of 1.759%;
    • 30-years is at 2.259%, up from 2.251%
    • 2-years yield is at 1.571%, down from 1.575%
    • The 10-Year-&-2-Year spread is at 0.195 up from 0.184
  • VIX
    • Is at 13.45 down from October 24 close of 13.71; below 5-day SMA 13.922
    • Recent high was 20.38 on October 8; recent low was 13.31 on October 17

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

  • Under Pressure
  • September was a green candle with small lower shadow and longer upper shadow
    • Stochastic %K is forming a Bearish Divergence
    • RSI-9 is below a downtrend line from January 2018 high; forming a Bearish Divergence
    • Near the middle band of the 120-month regression channel
  • 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 October 18 was a green candle with almost no lower shadow and an upper shadow equal to the real body
    • Again approaching the upper bound of a broadening pattern
    • Stochastic (9,1, 3): %K is above %D;
    • RSI (9) has turned up and just above 50
  • Last week was up +15.93 or +0.5%; the 5-week ATR is 77.69 or 1.5%
  • Last week’s pivot point=2985.81, R1=3008.68, R2=3031.16; S1=2963.33, S2=2940.46; no pivot levels were breached
  • An up week; second in last five weeks and fifth in last ten weeks
  • Last swing low, 2728.81, was the low on June 3, 2018; last swing high was 3027.98, made during the week of July 22
  • Above 10-week EMA; above 39-week SMA and 89-week SMA
  • Uptrend
  • A red candle with almost small upper shadow and longer lower shadow that closed up for the day; near the upper bound of a symmetrical triangle
    • %K is rising above %D from above 80
    • RSI-9 is below 8-day SMA
  • Above 20-day EMA, 50-day EMA, 100-day SMA and 200-day SMA;
  • Uptrend
2-Hour (e-mini future)
  • Drifting mostly sideways since 10:00 AM on October 15 within a channel bounded at 3014.00 and 2982.00
    • RSI-21 drifting down since 6:00 AM
    • %K is crisscrossing %D lower
  • At/above 20-bar EMA, which is above EMA10 of EMA50
  • Bias: Side-Up
30-Minute (e-mini future)
  • Moving sideways since 4:00 PM on October 23
    • RSI-21 moving along 40 down since 11:00 AM on October 24
    • %K is below %D
    • Below 20-bar EMA, which is at/above EMA10 of EMA50
  • Bias: Side-Up
15-Minute (e-mini future)
  • Bollinger Band (20, 2.0) is moving sideways since 4:30 PM
  • The Bollinger Band narrowed from 10:00 PM to 8:00 AM; expanding since with price walking down the owerr bound
  • Stochastic (9, 1, 3): %K is crisscrossing %D near 30
  • Bias: Side

Previous Session

Major U.S. indices closed mixed on Thursday, October 24 in mostly higher volume. Dow Jones Industrial Average, Russell 2000 and Dow Jones Transportation Average closed lower. Russell 2000 traded in lower volume. The indices opened to the upside then immediately declined to turn negative then rose and again fell before rising near the close.


The major U.S. indices closed mixed on Thursday, with the tech-sensitive Nasdaq Composite (+0.8%) rising above its peers in an earnings-driven advance. The S&P 500 (+0.2%), Dow Jones Industrial Average (-0.1%), and Russell 2000 (-0.2%) finished near their unchanged marks.

The Nasdaq benefited from upbeat results from a host of companies, including Microsoft (MSFT 139.94, +2.70, +2.0%), PayPal (PYPL 104.91, +8.27, +8.6%), Tesla (TSLA 299.68, +45.00, +17.7%), and Lam Research (LRCX 265.60, +32.42, +13.9%). The Philadelphia Semiconductor Index (+2.5%) rose on the back of Lam Research’s results and guidance.


U.S. Treasuries finished the session little changed. The 2-yr yield and the 10-yr yield were unchanged at 1.58% and 1.76%, respectively. The U.S. Dollar Index increased 0.2% to 97.68. WTI crude increased 0.7%, or $0.40, to $56.23/bbl.


• New home sales slipped 0.7% m/m to a seasonally adjusted annual rate of 701,000 units ( consensus 703,000) from a downwardly revised 706,000 (from 713,000) in August. On a year-over-year basis, new home sales were up 15.5%.
o The key takeaway from the report is the weaker activity seen in sales of higher-priced homes, as that speaks to the affordability pressures presented by mortgage rates that went up in September. Remember, new home sales are recorded when a contract is signed not when the sale closes (as is the case for existing home sales).
• Durable goods orders for September declined 1.1% ( consensus -1.0%) on the heels of an upwardly revised 0.3% increase (from 0.2%) in August. Excluding transportation, durable goods orders were down 0.3%, as expected.
o The key takeaway from the report is the indication that business spending remained weak, as evidenced by the 0.5% decline in nondefense capital goods orders excluding aircraft, which followed a 0.6% decline in August.
• Initial claims for the week ending October 19 decreased by 6,000 to 212,000 ( consensus 217,000). Continuing claims for the week ending October 12 decreased by 1,000 to 1.682 million.
o The key takeaway from the report is that there are no alarming trends in this series for the consumer outlook, as jobless claims continue to track close to historic lows.

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