Morning Notes – Tuesday January 21, 2020

Directional Bias For The Day:

  • S&P Futures are lower;
  • The odds are for a down day – watch for break above 3323.25 for change of fortune
  • No key economic data due:

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 3318.86, 3309.97 and 3302.97
  • Critical resistance levels for S&P 500 are 3321.24, 3329.88 and 3343.31
  • Key levels for eMini futures: break above 3316.25, the high of 2:30 AM and break below 3307.25, the low of 3:30 AM


  • On Friday, at 4:00 PM, S&P future (March 2020) closed at 3328.25 and the index closed at 3329.15 – a spread of about -1.00 points; futures closed at 3325.00 for the day; the fair value is +3.25
  • Pre-NYSE session open, futures are lower – at 9:00 AM, S&P 500 futures were down by -9.75; Dow by -66 and NASDAQ by -29.00

Markets Around The World

  • Markets in the East closed down;
  • European markets are lower
  • Currencies:
    Up Down
    • EUR/USD
    • GBP/USD
    • AUD/USD
    • NZD/USD
    • USD/CAD
    • INR/USD
    • Dollar index
    • USD/JPY
    • USD/CHF
  • Commodities:
    Up Down
    • Palladium
    • Sugar
    • Cocoa
    • Crude Oil
    • NatGas
    • Gold
    • Silver
    • Copper
    • Platinum
    • Coffee
    • Cotton
  • Bonds
    • 10-yrs yield closed at 1.787%, down from January 16 close of 1.809%;
    • 30-years is at 2.246%, down from 2.261%
    • 2-years yield is at 1.522%, down from 1.563%
    • The 10-Year-&-2-Year spread is at 0.265 down from 0.287
  • VIX
    • Is at 12.94 up +0.62 from January 17; above 5-day SMA
    • Recent high was 16.39 on January 6; recent low was 11.72 on December 26

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

  • Uptrend
  • December 2019 was a relatively large green candle with small upper shadow and a lower shadow half the size of the real body; fourth up month in a row and tenth in 2019
    • Stochastic %K is above %D and above 90
    • RSI-9 is breaking above a downtrend line from January 2018 high; above 70
    • 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 January 17 was a green candle with almost no lower shadow and small upper shadow
    • Continuing the break above the upper bound of a broadening pattern
    • Stochastic (9,1, 3): %K crossed above %D; above 90; potential bearish divergence
    • RSI (9) is above 80
  • Last week was up +64.27 or +2.0%; the 5-week ATR is 52.65
  • Last week’s pivot point=3309.31, R1=32350.019, R2=3370.76; S1=3288.74, S2=3247.86; R1/R2 pivot levels were breached
  • An up week; fourth in last five weeks and eight in last ten weeks
  • At all time highs; Last swing low, 2822.12, was the low on August 5, 2019; last swing high was 3027.98, made during the week of July 22, 2019
  • Above 10-week EMA; above 39-week SMA and 89-week SMA
  • Uptrend
  • A relatively small green candle with small upper and lower shadows at all time highs
    • %K is above %D above 90;
    • RSI-9 is above 70; above 8-day SMA; potential Bearish Divergence
  • Above 20-day EMA, 50-day EMA, 100-day SMA and 200-day SMA;
  • Uptrend
2-Hour (e-mini future)
  • Moving sideways to down since 2:00 AM on January 17; upswing since 6:00 PM on January 7
    • RSI-21 declined from above 70 in steps to below 30; near 45
    • %K is crisscrossing %D but rising from near 30
  • Below 20-bar EMA but above EMA10 of EMA50
  • Bias: Up-Side
30-Minute (e-mini future)
  • Sideways to down since 4:00 PM on January 16 at all time highs
    • RSI-21 rising from near 30 since Asian session; near 50
    • %K is crisscrossing %D higher
  • Above 20-bar EMA but below EMA10 of EMA50
  • Bias: Up-Side
15-Minute (e-mini future)
  • Bollinger Band (20, 2.0) is sloping up slightly since 2:00 AM
  • The Bollinger Band is relatively stable sized since 2:00 AM
  • Stochastic (9, 1, 3): %K is crisscrossing %D lower;
  • Bias: Down-Side

Previous Session

Major U.S. indices closed mixed on Friday, January 17 in higher volume. Russell 2000 and Dow Jones Transportation Average closed down.

For the week, major U.S. indices closed up in mostly higher volume. NASDAQ Composite traded in lower volume. All S&P sectors except Energy closed up for the week.


The S&P 500 advanced 0.4% on Friday, as upbeat economic data helped extend the market’s record run. The Dow Jones Industrial Average (+0.2%) and Nasdaq Composite (+0.3%) also closed at new highs, while the Russell 2000 (-0.3%) finished lower.

U.S. Treasuries finished mixed amid some curve-steepening activity. The 2-yr yield declined one basis point to 1.56%, while the 10-yr yield increased three basis points to 1.84%. The U.S. Dollar Index increased 0.3% to 97.62. WTI crude increased 0.1% to $58.55/bbl.


• Total housing starts surged 16.9% m/m in December to a seasonally adjusted annual rate of 1.608 million ( consensus 1.380 million), driven by an 11.2% increase in single-family starts and a 30% increase in multi-unit starts. Building permits, meanwhile, declined 3.9% m/m to 1.416 million ( consensus 1.460 million), with single-family permits down 0.5%.
o The key takeaway from the report is the huge starts number and the recognition that the largest homebuilding region — the South — saw an impressive 11.3% increase in single-family starts. That’s a good sign as it relates to potential supply coming online and it’s good simply as a positive growth indicator.
• Industrial production declined 0.3% in December ( consensus +0.1%), pressured by a 5.6% decline in utilities output that stemmed from unseasonably warm weather. The capacity utilization rate fell to 77.0% from an upwardly revised 77.4% (from 77.3%) in November.
o The key takeaway from the report is that manufacturing output increased 0.2% despite a large 4.6% drop in the output of motor vehicles and parts. Excluding the motor vehicle sector, factory output increased 0.5%.
• The preliminary reading of the University of Michigan’s Index of Consumer Sentiment for January declined to 99.1 ( consensus 98.9) from 99.3 in November.
• Job openings declined to 6.800 million from a revised 7.361 million (from 7.267 million) in November, according to the JOLTS report.

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