Morning Notes – Thursday December 12, 2019

Directional Bias For The Day:

  • S&P Futures are little changed to lower;
  • Moving mostly sideways since 8:30 AM on December 10
  • The odds are for a sideways to down day – watch for break above 3150.75 for change of fortune
  • Key economic data due:
    • PPI ( 0.0% vs. 0.2% est. ; prev. 0.4%) at 8:30 AM
    • Core PPI ( -0.2% vs. 0.2% est. ; prev., 0.3%) at 8:30 AM
    • Unemployment Claims ( 252K vs. 213K est. ; prev. 203K) at 8:30 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 3133.21, 3126.09 and 3124.90
  • Critical resistance levels for S&P 500 are 3143.98, 3150.37 and 3154.26
  • Key levels for eMini futures: break above 3150.75, the high of 4:30 AM and break below 3133.50, the low of 1:30 PM on Wednesday


  • On Wednesday, at 4:00 PM, S&P future closed at 3141.75 and the index closed at 3141.63 – a spread of about +0.25 points; futures closed at 3143.00 for the day; the fair value is -1.25
  • Pre-NYSE session open, futures are lower – at 9:00 AM, S&P 500 futures were down by -1.00; Dow by -25 and NASDAQ by -9.25

Markets Around The World

  • Markets in the East closed mostly higher – Shanghai and Sydney were down
  • European markets are mixed – U.K., Spain and Italy are higher; Germany, France, Switzerland and STOXX 600 are lower
  • Currencies:
    Up Down
    • Dollar index
    • EUR/USD
    • USD/JPY
    • AUD/USD
    • NZD/USD
    • USD/CAD
    • INR/USD
    • GBP/USD
    • USD/CHF
  • Commodities:
    Up Down
    • Crude Oil
    • NatGas
    • Gold
    • Silver
    • Platinum
    • Palladium
    • Sugar
    • Coffee
    • Copper
    • Cotton
    • Cocoa
  • Bonds
    • 10-yrs yield is at 1.793%, up from December 11 close of 1.790%;
    • 30-years is at 2.243%, up from 2.220%
    • 2-years yield is at 1.601%, down from 1.605%
    • The 10-Year-&-2-Year spread is at 0.197 up from 0.185
  • VIX
    • Is at 15.35 up from December 11 close of 14.99; 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:

  • 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
  • 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
  • A small green with small shadows
    • %K is crossing above %D; just above 80
    • RSI-9 is just above 60 and above 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 to sideways 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; advancing since 6:00 AM on December 10 after making a low of 3116.25
    • RSI-21 turning down near 50
    • %K is below %D
  • At/above 20-bar EMA, which is above EMA10 of EMA50
  • Bias: Up-Side
30-Minute (e-mini future)
  • Drifting sideways since 9:00 AM on December 6; emerging saucer pattern; near the top of the pattern
    • RSI-21 declined to near 45 from near 60
    • %K is above %D since 7:30 AM
    • Below EMA10 of EMA50, which is below 10-bar EMA
  • Bias: Side
15-Minute (e-mini future)
  • Bollinger Band (20, 2.0) is drifting sideways to up since 2:00 PM on Wednesday
  • The Bollinger Band was relatively narrow till 5:45 AM; expanding since with price walking down the lower band
  • Stochastic (9, 1, 3): %K is crisscrossing %D below 50
  • Bias: Side

Previous Session

Major U.S. indices closed higher on Wednesday, December 11 in mostly higher volume. NASDAQ Composite traded in lower volume. Day’s price rage was small and price mostly moved sideways.


The S&P 500 increased 0.3% on Wednesday, as investors remained comforted by the few surprises in the FOMC’s latest policy directive and Fed Chair Powell’s press conference. The Nasdaq Composite (+0.4%) pulled out ahead, while the Dow Jones Industrial Average (+0.1%) and Russell 2000 (unch) finished closer to their flat lines.


The broader advance was kept in check, though, with the S&P 500 materials (+0.7%), information technology (+0.7%), and industrials (+0.7%) sectors finishing atop the standings. The real estate (-0.8%), financials (-0.2%), and energy (-0.2%) sectors finished in negative territory.


U.S. Treasuries, which were already trending higher before the FOMC announcement, extended gains during Mr. Powell’s press conference. Both the 2-yr yield and 10-yr yield declined four basis points each to 1.61% and 1.79%, respectively, with investors presumably unconcerned about inflation. The U.S. Dollar Index fell 0.3% to 97.10. WTI crude fell 0.8% (-0.47) to $58.74/bbl.


• The Consumer Price Index (CPI) increased 0.3% month-over-month in November ( consensus +0.2%) and core CPI, which excludes food and energy, increased 0.2%, as expected, for the second straight month.
o The key takeaway from the report is that there was an uptick in prices across most key categories. That uptick is something the Fed wants to see at this juncture and it won’t be quick to stamp it out with a rate hike, particularly since the Fed’s favorite inflation gauge — the PCE Price Index — is still running comfortably below the longer-run 2.0% inflation target.
• The Treasury Budget for November showed a deficit of $208.8 billion versus a deficit of $204.9 billion in the same period a year ago. This budget data is not seasonally adjusted, so the November deficit cannot be compared to the deficit of $134.5 billion for October.
o The budget deficit over the last 12 months is $1.022 trillion versus $1.018 trillion in October. The fiscal year-to-date deficit is $343.3 billion versus $305.4 for the same period a year ago.
• The weekly MBA Mortgage Applications Index increased 3.8% following a 9.2% drop in the prior week.

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