Directional Bias For The Day:
- S&P Futures are higher following a nearly 50+ points drop during Asian session;
- The odds are for an up day with elevated volatility – watch for break below 3221.75 for change of fortune
- Key economic data due:
- ADP Non-Farm Employment Change (202K vs.160K est.; prev. 124K ) at 8:15 AM
Directional Bias Before Open:
- Critical support levels for S&P 500 are 3232.43, 3214.64 and 3205.37
- Critical resistance levels for S&P 500 are 3242.71, 3246.15 and 3257.54
- Key levels for eMini futures: break above 3244.75, the high of 11:00 AM on Tuesday and break below 3221.75, the low of 0:30 AM
- On Tuesday, at 4:00 PM, S&P future (March 2020) closed at 3237.25 and the index closed at 3237.18 – a spread of about +0.00 points; futures closed at 3235.25 for the day; the fair value is +2.00
- Pre-NYSE session open, futures are higher – at 8:15 AM, S&P 500 futures were up by +9.00; Dow by +13 and NASDAQ by +30.50
Markets Around The World
- Markets in the East closed lower
- European markets are mostly up – U.K. and Switzerland are down
- Dollar index
- Crude Oil
- 10-yrs yield closed at 1.827%, up from January 6 close of 1.811%;
- 30-years is at 2.305%, up from 2.281%
- 2-years yield is at 1.544%, up from 1.536%
- The 10-Year-&-2-Year spread is at 0.283 up from 0.275
- Is at 13.98 up from January 7 close of 13.79; above 5-day SMA
- Recent high was 17.99 on December 3; recent low was 11.72 on December 26
The trend and patterns on various time frames for S&P 500:
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|30-Minute (e-mini future)||
|15-Minute (e-mini future)||
Major U.S. indices closed mostly lower on Tuesday, January 7 in mixed volume. Dow Jones Transportation Average closed higher and Dow Jones Industrial Average and NASDAQ Composite traded in higher volume. Most major indices made small candles showing indecision.
The S&P 500 wavered with modest losses on Tuesday, losing 0.3% as the current geopolitical uncertainty helped restrain risk sentiment. The Dow Jones Industrial Average (-0.4%) and Russell 2000 (-0.3%) posted comparable declines, while the Nasdaq Composite (unch) fared better amid strength in the semiconductor space.
Within the stock market, all 11 S&P 500 sectors still finished lower in a lackluster session. The real estate sector (-1.2%) was today’s weakest performer, followed by the consumer staples (-0.7%) and financials (-0.7%) sectors. A fade into the close pushed the communication services (-0.04%), information technology (-0.1%), and industrials (-0.1%) sectors into negative territory.
U.S. Treasuries finished the tight-ranged session little changed. The 2-yr yield remained at 1.54%, the 10-yr yield increased two basis points to 1.83%. The U.S. Dollar Index increased 0.4% to 97.02.
• The ISM Non-Manufacturing Index for December registered a 55.0% reading (Briefing.com consensus 54.3%), up from 53.9% in November and the fastest pace since August 2019.
o The key takeaway from the report is that it is not as encouraging as it appears at first blush. The pace of new orders, new export orders, and employment all slowed; meanwhile, the backlog of orders contracted at a faster pace than November.
• Factory Orders declined 0.7% m/m in November (Briefing.com consensus -0.8%) following a downwardly revised 0.2% increase (from 0.3%) in October. Shipments were up 0.3% following a 0.1% increase in October.
o The key takeaway from the report is that it reflects the soft conditions for the manufacturing sector. On a year-to-date basis, orders for durable goods were down 1.3% not seasonally adjusted while orders for nondurable goods were down 0.1%.
• The trade deficit narrowed to $43.1 billion in November (Briefing.com consensus -$43.5 billion) from an upwardly revised $46.9 billion (from -$47.2 bln) in October.
o The key takeaway from the report is that the real trade deficit of $75.25 billion left the fourth quarter average 9% below the third quarter average, which will be a positive input for Q4 GDP growth forecasts.