Morning Notes – Thursday November 21, 2019

Directional Bias For The Day:

  • S&P Futures are higher; rising since making a near double bottom at 8:30 PM
  • The odds are for an up to sideways day; watch for break below 3098.25 for change of fortune
  • Key economic data due:
    • Philly Fed Manufacturing Index ( 10.4 vs. 7.0 est.; prev. 5.6) at 8:30 AM
    • Unemployment Claims (227K vs. 215K est. ; prev. 225K) at 8:30 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 3102.45, 3091.41 and 3082.26
  • Critical resistance levels for S&P 500 are 3111.56, 3118.97 and 3125.16
  • Key levels for eMini futures: break above 3118.50, the high of 10:30 AM on November 20 and break below 3105.50, the low of 7:00 AM

Pre-Open

  • On Wednesday, at 4:00 PM, S&P future closed at 3108.25 and the index closed at 3108.46 – a spread of about -0.25 points; futures closed at 3109.00 for the day; the fair value is -0.75
  • Pre-NYSE session open, futures are higher – at 8:15 AM, S&P 500 futures were up by +4.00; Dow by +33 and NASDAQ by +9.00

Markets Around The World

  • Markets in the East closed lower;
  • European markets are mostly lower – Italy is up
  • Currencies:
    Up Down
    • EUR/USD
    • GBP/USD
    • USD/JPY
    • USD/CHF
    • AUD/USD
    • NZD/USD
    • USD/CAD
    • INR/USD
    • Dollar index
  • Commodities:
    Up Down
    • Crude Oil
    • Cotton
    • NatGas
    • Gold
    • Silver
    • Copper
    • Platinum
    • Palladium
    • Sugar
    • Coffee
    • Cocoa
  • Bonds
    • 10-yrs yield closed at 1.738%, down from November 19 close of 1.786%;
    • 30-years is at 2.203%, down from 2.255%
    • 2-years yield is at 1.577%, down from 1.590%
    • The 10-Year-&-2-Year spread is at 0.161 down from 0.196
  • VIX
    • Is at 12.81 up from November 20 close of 12.78; above 5-day SMA
    • Recent high was 13.95 on October 31; recent low was 11.92 on November 15

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

Monthly
  • Uptrend resumed
  • September was a green candle with small upper shadow and lower shadow longer than the real body
    • Stochastic %K is above %D and above 90
    • RSI-9 is breaking above a downtrend line from January 2018 high;
    • Rising to the upper band from 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
Weekly:
  • The week ending on November 15 was a green candle with almost no upper and lower shadows
    • Breaking above the upper bound of a broadening pattern
    • Stochastic (9,1, 3): %K is above %D; above 90;
    • RSI (9) is above 70
  • Last week was up +27.38 or +0.9%; the 5-week ATR is 41.49
  • Last week’s pivot point=3105.58, R1=3135.34, R2=3150.22; S1=3090.70, S2=3060.94; R1/R2 pivot levels were breached
  • An up week; fifth in last five weeks and seventh 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
Daily
  • A small red real bodied candle with small upper shadow and long lower shadow
    • %K is crisscrossing %D above 80
    • RSI-9 is below 8-day SMA
  • Broke above a symmetrical triangle, that resembles an ascending triangle, on October 25;
    • Upper bound 3027.98 and lower bound 2898.07; max height almost 130; break point is 3016.00; the 61.8% extension target near 3096.00 is achieved; the 100% extension target is near 3146.00;
  • Above 20-day EMA, 50-day EMA, 100-day SMA and 200-day SMA;
  • Uptrend
2-Hour (e-mini future)
  • Drifting down in steps since 6:00 AM on Tuesday from a high of 3132.50 to near 3090.75 mid-day on Wednesday; bounced up to 3110.00 by 8:00 AM after testing the low in Asian session; uptrend since October 9
    • RSI-21 bouncing from near 30 to near 50
    • %K is above %D since Asian session
  • At/below 20-bar EMA, which is below EMA10 of EMA50
  • Bias: Up-Side
30-Minute (e-mini future)
  • Moving down since 6:00 AM on November 19; bouncing since 8:30 PM after making a near double bottom
    • RSI-21 rising since 8:30 PM from near 30 to above 50
    • %K is above %D since 7:30 AM
    • At/above EMA10 of EMA50, which is above 20-bar EMA
  • Bias: Side-Down
15-Minute (e-mini future)
  • Bollinger Band (20, 2.0) is mostly drifting sideways since 10:00 PM
  • The Bollinger Band was relatively narrow from 12:00 AM to 5:00 AM; expanding since with price walking up the upper band
  • Stochastic (9, 1, 3): %K is above %D since 7:30 AM
  • Bias: Side-Down-Side

Previous Session

Major U.S. indices closed lower on Wednesday, November 20 in higher volume. Indices were under pressure from the get go and then declined sharply mid-day before bouncing from the lows in the afternoon. Most made small red real body with almost no upper shadow and long lower shadow.

From Briefing.com:

The S&P 500 declined as much as 0.9% on Wednesday after Reuters reported that a Phase One trade deal may not get completed this year. Stocks cut losses throughout the afternoon, leaving the benchmark index down 0.4% for the session — comparable to the losses in the Dow Jones Industrial Average (-0.4%), Nasdaq Composite (-0.5%), and Russell 2000 (-0.4%).

[…]

The trade-sensitive areas of the market like the S&P 500 materials (-1.2%), industrials (-0.8%), and information technology (-0.7%) sectors led the decline. The communication services sector (-0.8%), which contains many growth-oriented stocks, also underperformed.

[…]

Leading the afternoon comeback was the energy sector (+1.0%), which found reprieve amid a 3% rebound in oil prices ($56.91, +1.70, +3.1%). The defensive-oriented utilities (+0.6%), consumer staples (+0.2%), and real estate (+0.03%) sectors also finished in positive territory.

[…]

U.S. Treasuries continued to benefit from a defensive mindset, which sent yields lower in a curve-flattening trade. The 2-yr yield declined two basis points to 1.57%, and the 10-yr yield declined five basis points to 1.74%. The U.S. Dollar Index increased 0.1% to 97.91.

[…]

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