Morning Notes – Tuesday December 10, 2019

Directional Bias For The Day:

  • S&P Futures are little changed to higher; were down more than 20 points till 6:00 AM and then bounced on news
  • The odds are for a sideways to down day with increased volatility; watch for break above 3141.75 for change of fortune
  • Key economic data due:
    • Revised Non-Farm Productivity ( -0.2% vs. -0.1%; prev. -0.3% ) at 8:30 AM
    • Revised Unit Labor Cost ( 2.5% vs. 3.4% est.; prev. 3.6% ) at 8:30 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 3134.62, 3124.90 and 3117.43
  • Critical resistance levels for S&P 500 are 3141.56, 3150.37 and 3154.26
  • Key levels for eMini futures: break above 3141.75, the high of 8:30 AM and break below 3122.50, the low of 7:30 AM

Pre-Open

  • On Monday, at 4:00 PM, S&P future closed at 3136.50 and the index closed at 3135.96 – a spread of about +0.50 points; futures closed at 3134.50 for the day; the fair value is +2.00
  • Pre-NYSE session open, futures are higher – at 9:00 AM, S&P 500 futures were up by +3.00; Dow by +20 and NASDAQ by +15.00

Markets Around The World

  • Markets in the East closed mostly lower – Shanghai and Seoul closed up;
  • European markets are mostly lower – Italy is higher
  • Currencies:
    Up Down
    • EUR/USD
    • GBP/USD
    • USD/JPY
    • NZD/USD
    • USD/CAD
    • Dollar index
    • USD/CHF
    • AUD/USD
    • INR/USD
  • Commodities:
    Up Down
    • Crude Oil
    • NatGas
    • Gold
    • Silver
    • Copper
    • Platinum
    • Palladium
    • Sugar
    • Coffee
    • Cotton
    • Cocoa
  • Bonds
    • 10-yrs yield is at 1.819%, down from December 9 close of 1.829%;
    • 30-years is at 2.247%, down from 2.264%
    • 2-years yield is at 1.629%, up from 1.621%
    • The 10-Year-&-2-Year spread is at 0.208 down from 0.209
  • VIX
    • Is at 15.52 down from December 9 close of 15.86; above 5-day SMA
    • Recent high was 17.99 on December 3; recent low was 12.25 on December 9

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

Monthly
  • Uptrend resumed
  • October was a relatively large green candle with almost not lower shadow and small upper shadow
    • 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
Weekly:
  • The week ending on December 6 was a green candle that looks like a gravestone doji near the all time highs
    • Continuing the break above the upper bound of a broadening pattern
    • Stochastic (9,1, 3): %K crossed above %D; above 90;
    • RSI (9) is above 70
  • Last week was up +4.93 or +0.2%; the 5-week ATR is 47.40
  • Last week’s pivot point=3122.28, R1=3174.23, R2=3202.55; S1=3093.96, S2=3042.01; S1/S2/S3 pivot levels were breached
  • Second up week; fourth in last five weeks and eight 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 candle with almost no lower shadow and small upper shadow
    • %K is above %D; above 70 but turning down
    • RSI-9 is just below 60 but 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 100% extension target near 3146.00 is achieved; the 161.8% extension target is near 3226.00
  • Above 20-day EMA, 50-day EMA, 100-day SMA and 200-day SMA;
  • Uptrend
2-Hour (e-mini future)
  • Moving lower since 12:00 PM on December 6 after making a high of 3151.00 near all time highs of 3158.00 made on December 2; bouncing since 8:00 AM from a low of 3116.25
    • RSI-21 turning up from just below 30
    • %K is crossed above %D
  • Crossing above 20-bar EMA, which is above EMA10 of EMA50
  • Bias: Up-Side
30-Minute (e-mini future)
  • Drifting down since 12:30 PM on Friday; bouncing up since 6:00 AM
    • RSI-21 crossing above 50
    • %K is above %D since 6:30 AM
    • Above 20-bar EMA; at or above EMA10 of EMA50
  • Bias: Up-Side
15-Minute (e-mini future)
  • Bollinger Band (20, 2.0) is drifting down since 2:30 PM on Friday
  • The Bollinger Band was relatively narrow till 2:45 AM; expanding since; price first walked down the lower band and the walking up the upper band since 8:15 AM
  • Stochastic (9, 1, 3): %K is crossing below %D
  • Bias: Up-Side

Previous Session

Major U.S. indices closed lower on Monday, December 9 in lower volume. The day’s price range was small and the trend was mostly lower from the beginning.

From Briefing.com:

The S&P 500 lost 0.3% on Monday, closing at session lows amid a lack of buying conviction. The Dow Jones Industrial Average declined 0.4%, the Nasdaq Composite declined 0.4%, and the Russell 2000 declined 0.3%.

[…]

Losses were made most prevalent in the S&P 500 health care (-0.7%), utilities (-0.5%), and information technology (-0.5%) sectors. The latter was pressured by Apple (AAPL 266.92, -3.79, -1.4%), which pulled back from record territory. Conversely, the consumer staples (+0.2%), real estate (+0.1%), and consumer discretionary (+0.1%) sectors finished higher.

[…]

U.S. Treasuries finished the session relatively unchanged. The 2-yr yield declined one basis point to 1.62%, and the 10-yr yield declined one basis point to 1.83%. The U.S. Dollar Index declined 0.1% to 97.64. WTI crude declined 0.4%, or $0.23, to $58.97/bbl.

[…]

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