Morning Notes – Tuesday January 7, 2020

Directional Bias For The Day:

  • S&P Futures are lower; price is arching own on 30-minute charts
  • The odds are for a down day with elevated volatility – watch for break above 3247.25 for change of fortune
  • Key economic data due:
    • Trade Balance ( -43.1B vs. -44.5B est. ; prev. -46.9B ) at 8:30 AM
    • ISM Non-Manufacturing PMI ( 54.5 est. ; prev. 53.9) at 10:00 AM
    • Factory Orders ( -0.6% est.; prev. 0.3%) at 10:00 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 3222.34, 3212.03 and 3204.10
  • Critical resistance levels for S&P 500 are 3234.54, 3246.15 and 3257.54
  • Key levels for eMini futures: break above 3247.25, the high of 7:30 AM and break below 3235.75, the low of 2:00 PM on Monday

Pre-Open

  • On Monday, at 4:00 PM, S&P future (March 2020) closed at 3246.50 and the index closed at 3246.28 – a spread of about +0.25 points; futures closed at 3243.50 for the day; the fair value is +3.00
  • Pre-NYSE session open, futures are mixed – at 9:00 AM, S&P 500 futures were down by -4.00; Dow down by -33 and NASDAQ up by +12.50

Markets Around The World

  • Markets in the East closed higher
  • European markets are mostly up – Spain is down
  • Currencies:
    Up Down
    • Dollar index
    • USD/JPY
    • USD/CHF
    • USD/CAD
    • EUR/USD
    • GBP/USD
    • AUD/USD
    • NZD/USD
    • INR/USD
  • Commodities:
    Up Down
    • NatGas
    • Gold
    • Silver
    • Platinum
    • Palladium
    • Cocoa
    • Crude Oil
    • Copper
    • Sugar
    • Coffee
    • Cotton
  • Bonds
    • 10-yrs yield closed at 1.809%, up from January 3 close of 1.788%;
    • 30-years is at 2.292%, up from 2.249%
    • 2-years yield is at 1.536%, up from 1.533%
    • The 10-Year-&-2-Year spread is at 0.273 up from 0.255
  • VIX
    • Is at 14.09 up from January 6 close of 13.85; 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:

Monthly
  • 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
Weekly:
  • The week ending on January 3 was a doji candle
    • 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 down -5.17 or -0.2%; the 5-week ATR is 53.45
  • Last week’s pivot point=3235.01, R1=3257.98, R2=3281.12; S1=3211.87, S2=3188.90; R1/S1 pivot levels were breached
  • First down week in last five weeks and second in last ten weeks
  • Near 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
Daily
  • A relatively large green candle that gapped down at the open;
    • %K at %D from near 50; potential %D Bearish Divergence
    • RSI-9 is turning up near 60; below 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)
  • Mostly moving sideways since 4:00 Pm on December 26 between 3260.00 and 3210.00; trending higher since 10:00 AM on December 3 in steps
    • RSI-21 is near 50
    • %K is below %D lower
  • At/above 20-bar EMA, which is above EMA10 of EMA50
  • Bias: Up-Side
30-Minute (e-mini future)
  • Arching down since 2:00 PM on Monday near a resistance zone
    • RSI-21 declining from above 60 to below 50
    • %K is crisscrossing %D lower
    • Below EMA10 of EMA50, which is below 20-bar EMA
  • Bias: Up-Side
15-Minute (e-mini future)
  • Bollinger Band (20, 2.0) is arching down since 6:15 PM on Monday
  • The Bollinger Band is relatively stable sized since NYSE close on Monday
  • Stochastic (9, 1, 3): %K is crisscrossing %D lower
  • Bias: Up-Side

Previous Session

Major U.S. indices closed mostly higher on Monday, January 6 in mostly lower volume. Dow Jones Transportation Average closed lower and Dow Jones Industrial Average traded in higher volume. Most major indices gapped down at the open but then closed above the opens and made bullish engulfing candles.

From Briefing.com:

The S&P 500 declined as much as 0.6% shortly after Monday’s open as tensions escalated in the Middle East, but a rebound led by mega-cap technology stocks helped the benchmark index close at session highs with a 0.4% gain. The Dow Jones Industrial Average gained 0.2%, the Nasdaq Composite gained 0.6%, and the Russell 2000 gained 0.1%.

[…]

The S&P 500 communication services sector (+1.2%) was today’s sector leader, largely due to the 2.5% gain in shares of Alphabet (GOOG 1394.21, +33.55) after the stock was upgraded to Buy from Hold at Pivotal Research Group.

[…]

U.S. Treasuries finished the session on a lower note, as investors bought the dip in equities. The 2-yr yield increased three basis points to 1.54%, and the 10-yr yield increased two basis points to 1.81%. The U.S. Dollar Index declined 0.2% to 96.66.

Morning Notes – Monday January 6, 2020

Directional Bias For The Day:

  • S&P Futures are lower; gapped down at week’s open and broke below a low since then; bouncing off the lows near support levels
  • The odds are for a down day with elevated volatility – watch for break above 3222.75 and 3230.00 for change of fortune
  • Key economic data due:
    • Final Services PMI ( 52.2 est. ; prev. 52.2) at 9:45 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 3222.34, 3212.03 and 3204.10
  • Critical resistance levels for S&P 500 are 3234.54, 3246.15 and 3257.54
  • Key levels for eMini futures: break above 3222.75, the high of 7:30 AM and break below 3208.75, the low of 4:00 AM

Pre-Open

  • On Friday, at 4:00 PM, S&P future (March 2020) closed at 3234.25 and the index closed at 3234.85 – a spread of about +0.50 points; futures closed at 3235.50 for the day; the fair value is -1.25
  • Pre-NYSE session open, futures are lower – at 8:15 AM, S&P 500 futures were down by -18.00; Dow by -179 and NASDAQ by -64.75

Markets Around The World

  • Markets in the East closed mostly lower – Sydney was up;
  • European markets are lower
  • Currencies:
    Up Down
    • EUR/USD
    • GBP/USD
    • USD/JPY
    • AUD/USD
    • NZD/USD
    • INR/USD
    • Dollar index
    • USD/CHF
    • USD/CAD
  • Commodities:
    Up Down
    • Crude Oil
    • NatGas
    • Gold
    • Silver
    • Platinum
    • Palladium
    • Sugar
    • Cotton
    • Copper
    • Coffee
    • Cocoa
  • Bonds
    • 10-yrs yield closed at 1.788%, down from January 2 close of 1.882%;
    • 30-years is at 2.249%, down from 2.341%
    • 2-years yield is at 1.533%, down from 1.573%
    • The 10-Year-&-2-Year spread is at 0.255 down from 0.309
  • VIX
    • Is at 15.72 up from January 3 close of 14.02; 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:

Monthly
  • 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
Weekly:
  • The week ending on January 3 was a doji candle
    • 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 down -5.17 or -0.2%; the 5-week ATR is 53.45
  • Last week’s pivot point=3235.01, R1=3257.98, R2=3281.12; S1=3211.87, S2=3188.90; R1/S1 pivot levels were breached
  • First down week in last five weeks and second in last ten weeks
  • Near 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
Daily
  • A green candle that gapped down at the open; the gap was filled but still closed below previous day
    • %K crossing below %D from just above 90; potential %D Bearish Divergence
    • RSI-9 declined to near 60 below 8-day SMA; Bearish Divergence
  • Above 20-day EMA, 50-day EMA, 100-day SMA and 200-day SMA;
  • Under Pressure
2-Hour (e-mini future)
  • Declining since 6:00 PM on January 2 after making all time high of 3263.50; near a support level – multiple low points over the past few days – around 3208.00; broke the sequence of higher highs and higher lows; trending higher since 10:00 AM on December 3 in steps
    • RSI-21 declined from above 75 to below 40 after making bearish divergence
    • %K crisscrossing %D lower
  • Below 20-bar EMA, which is below EMA10 of EMA50
  • Bias: Side-Down
30-Minute (e-mini future)
  • Trending down since 6:00 Pm on Thursday; gapped down at the week’s open; the gap is not closed; made double bottom at 4:00 AM with bias towards breaking below it
    • RSI-21 rising from near 30 at 3:30 AM to near 45
    • %K is below %D near 70 after crossing above it at 4:00 AM from below 10
    • At/below 20-bar EMA, which is below EMA10 of EMA50
  • Bias: Down-Side
15-Minute (e-mini future)
  • Bollinger Band (20, 2.0) is moving down since 6:15 PM on Sunday
  • The Bollinger Band is mostly expanded for past few days
  • Stochastic (9, 1, 3): %K is below %D from above 80
  • Bias: Side-Down

Previous Session

Major U.S. indices closed lower on Friday, January 3 in mixed volume. Dow Jones Industrial Average and NASDAQ Composite traded in higher volume. Most major indices gapped down at the open but then closed above the opens.

For the week, most major indices closed lower in higher volume. NASDAQ Composite was up for the week. Only four S&P sectors – Industrials, Technology, Real Estate and Telecom – were up for the week. Only Shanghai and Hong Kong were up for the week in Asia and only France was up in Europe.

From Briefing.com:

The S&P 500 declined 0.7% on Friday after a U.S. airstrike killed Iran’s top military commander, General Suleimani, prompting retaliatory threats from Iran and some profit taking in the stock market. The Dow Jones Industrial Average lost 0.8%, the Nasdaq Composite lost 0.8%, and the Russell 2000 lost 0.4%.

[…]

Cyclical sectors were among today’s laggards, with the S&P 500 materials (-1.6%), financials (-1.1%), and information technology (-1.1%) sectors leading the retreat. Conversely, the rate-sensitive real estate (+0.8%) and utilities (+0.1%) sectors benefited from the defensive positioning in Treasuries that drove yields lower.

The 2-yr yield fell six basis points to 1.51%, and the 10-yr yield fell nine basis points to 1.79%. The U.S. Dollar Index increased 0.1% to 96.90.

[…]

• The ISM Manufacturing Index for December registered a 47.2% reading (Briefing.com consensus 49.0%). That was below the 48.1% reading for November, the fifth straight sub-50.0% reading, and the lowest level for the index since June 2009.
o The key takeaway from the report is that the conditions remain weak in the manufacturing sector, although there might be a tendency to dismiss the dour December reading in favor of the view that the easing of trade tension between the U.S. and China could lead to better manufacturing activity in 2020.
• Total construction spending increased 0.6% m/m in November (Briefing.com consensus +0.3%) on the heels of an upwardly revised 0.1% increase (from -0.8%) in October. Residential spending was up 1.8% m/m and nonresidential spending was down 0.3% m/m.
o The key takeaway from the report is that new single-family construction (+1.2%) was the main driver of the pickup in residential spending.
Investors will not receive any notable economic data on Monday.

Morning Notes – Friday January 3, 2020

Directional Bias For The Day:

  • S&P Futures are lower; sharp decline at 8:30 PM; bouncing since 5:30 AM after falling nearly 60 points; up 20 points since
  • The odds are for a down day with elevated volatility – watch for break above 3240.00 for change of fortune
  • Key economic data due:
    • ISM Manufacturing PMI ( 49.0 est. ; prev. 48.1) at 10:00 AM
    • Construction Spending ( 0.4% est. ; prev. -0.8% ) at 10:00 AM
    • ISM Manufacturing Prices ( 47.7 est. ; prev. 46.7) at 10:00 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 3231.72, 3212.03 and 3204.10
  • Critical resistance levels for S&P 500 are 3235.53, 3244.13 and 3258.14
  • Key levels for eMini futures: break above 3235.00, the high of 2:00 AM and break below 3206.75, the low of 5:30 AM

Pre-Open

  • On Thursday, at 4:00 PM, S&P future (March 2020) closed at 3258.50 and the index closed at 3257.85 – a spread of about +0.75 points; futures closed at 3259.00 for the day; the fair value is -0.50
  • Pre-NYSE session open, futures are lower – at 8:45 AM, S&P 500 futures were down by -30.00; Dow by -236 and NASDAQ up by -95.50

Markets Around The World

  • Markets in the East closed mostly lower – Sydney and Seoul were up; Tokyo was closed
  • European markets are mostly lower – Switzerland is up
  • Currencies:
    Up Down
    • Dollar index
    • USD/CHF
    • USD/CAD
    • INR/USD
    • EUR/USD
    • GBP/USD
    • USD/JPY
    • AUD/USD
    • NZD/USD
  • Commodities:
    Up Down
    • Crude Oil
    • NatGas
    • Gold
    • Silver
    • Platinum
    • Palladium
    • Sugar
    • Coffee
    • Copper
    • Cotton
    • Cocoa (Unch.)
  • Bonds
    • 10-yrs yield closed at 1.823%, down from December 31 close of 1.919%;
    • 30-years is at 2.283%, down from 2.389%
    • 2-years yield is at 1.573%, down from 1.577%
    • The 10-Year-&-2-Year spread is at 0.350 down from 0.342
  • VIX
    • Is at 14.66 up from January 2 close of 12.47; above 5-day SMA
    • Recent high was 15.39 on December 31; recent low was 11.72 on December 26

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

Monthly
  • 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
Weekly:
  • The week ending on December 27 was a green candle with small real body and smaller shadows
    • 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 +18.80 or +0.6%; the 5-week ATR is 53.02
  • Last week’s pivot point=3236.15, R1=3251.80, R2=3263.57; S1=3224.38, S2=3208.73; R1 pivot level was breached
  • Fifth up week in last five weeks and ninth in last ten weeks
  • 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
Daily
  • A green candle with almost no upper shadow and small lower shadows; all time highs; breaking out
    • %K crossing above %D; just above 90; potential %D Bearish Divergence
    • RSI-9 is above 70 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 161.8% extension target near 3226.00 is achieved
  • Above 20-day EMA, 50-day EMA, 100-day SMA and 200-day SMA;
  • Uptrend
2-Hour (e-mini future)
  • Declining since 6:00 PM on Thursday after making all time high of 3263.50; below the low of 8:00 AM on December 31, broke the sequence of higher highs and higher lows; trending higher since 10:00 AM on December 3 in steps
    • RSI-21 declined from above 75 to below 40 after making bearish divergence
    • %K crisscrossing %D near 30
  • Below 20-bar EMA, which is at/above EMA10 of EMA50
  • Bias: Up-Side
30-Minute (e-mini future)
  • Falling since 8:30 PM; declined nearly 60 points or nearly 2% from all time highs; bouncing since 5:30 AM
    • RSI-21 rising from below 30 at 5:30 AM
    • %K is above %D since 5:30 AM; above 70
    • Above 20-bar EMA but below EMA10 of EMA50
  • Bias: Down-Side
15-Minute (e-mini future)
  • Bollinger Band (20, 2.0) is moving down since 10:30 PM on Thursday
  • The Bollinger Band is mostly expanded since 10:30 PM
  • Stochastic (9, 1, 3): %K is crossing below %D above 80
  • Bias: Down

Previous Session

Major U.S. indices closed mostly higher on Thursday, January 2, the first day of 2020, in higher volume. Russell 2000 closed down. Major indices except Russell 2000 and Dow Jones Transportation Average closed at all times highs.

From Briefing.com:

The large-cap indices climbed to new highs on this first trading day of 2020, as fresh stimulus out of China helped ignite a global equity rally. The Nasdaq Composite rose 1.3%, and the S&P 500 (+0.8%) and Dow Jones Industrial Average (+1.2%) followed suit. The Russell 2000 (-0.1%) finished lower.

China started the new year by announcing it will cut the reserve requirement ratio for small and large banks by 50 basis points on Jan. 6, providing about $115 billion in additional liquidity that can be lent out. China’s Shanghai Composite rose 1.2%, and Europe Stoxx 600 rose 0.9% amid a view that the stimulus action could have global ripple effects.

[…]

The advance in longer-dated U.S. Treasuries, which caused some curve-flattening activity, was another conflicting occurrence. The 2-yr yield was unchanged at 1.57%, and the 10-yr yield declined four basis points to 1.88%. The U.S. Dollar Index rose 0.4% to 96.81. WTI crude increased 0.1% (+0.05) to $61.15/bbl.

[…]

• Initial claims for the week ending December 28 decreased by 2,000 to 222,000 (Briefing.com consensus 225,000) while continuing claims for the week ending December 21 increased by 5,000 to 1.728 million.
o These headline results were not that intriguing, yet the key takeaway from the report — and what is intriguing — is that the four-week moving average for initial claims, which are a leading indicator, increased by 4,750 to 233,250. That is the highest four-week moving average since January 27, 2018.

Morning Notes – Friday December 20, 2019

Directional Bias For The Day:

  • S&P Futures are higher; moving higher since 4:30 AM
  • The odds are for an up day – watch for break below 3209.00 for change of fortune
  • Key economic data due:
    • Final GDP ( 2.1% vs. 2.1% est.; prev. 2.1%) at 8:30 AM
    • Final GDP Price Index (1.8% vs. 1.8% est.; prev. 1.8%) at 8:30 AM
    • Core PCR Index ( 0.1% est.; prev. 0.1% ) at 10:00 AM
    • Personal Spending (0.4% est. ; prev. 0.3% ) at 10:00 AM
    • Personal Income ( 0.3% est.; prev. 0.0% ) at 10:00 AM
    • Revised UoM Consumer Sentiment ( 99.2 est. ; prev. 99.2) at 10:00 AM
    • Revised UoM Inflation Expectations ( prev. 2.4%) at 10:00 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 3205.46, 3200.52 and 3192.32
  • Critical resistance levels for S&P 500 are 3209.79, 3214.22 and 3222.95
  • Key levels for eMini futures: break above 3217.00, the high of 9:00 AM and break below 3209.00, the low of 4:30 AM

Pre-Open

  • On Thursday, at 4:00 PM, S&P future (March 2020) closed at 3210.25 and the index closed at 3205.37 – a spread of about +5.00 points; futures closed at 3211.75 for the day; the fair value is -1.50
  • Pre-NYSE session open, futures are higher – at 8:45 AM, S&P 500 futures were up by +3.75; Dow by +47 and NASDAQ up by +20.75

Markets Around The World

  • Markets in the East closed mixed – Shanghai, Tokyo and Sydney closed lower; Hong Kong, Mumbai, Seoul and Singapore closed higher
  • European markets are higher
  • Currencies:
    Up Down
    • Dollar index
    • GBP/USD
    • USD/CHF
    • AUD/USD
    • USD/CAD
    • INR/USD
    • EUR/USD
    • USD/JPY
    • NZD/USD
  • Commodities:
    Up Down
    • NatGas
    • Silver
    • Platinum
    • Palladium
    • Coffee
    • Crude Oil
    • Gold
    • Copper
    • Sugar
    • Cotton
    • Cocoa
  • Bonds
    • 10-yrs yield closed at 1.935%, up from December 18 close of 1.924%;
    • 30-years is at 2.364%, up from 2.351%
    • 2-years yield is at 1.623%, down from 1.631%
    • The 10-Year-&-2-Year spread is at 0.312 up from 0.293
  • VIX
    • Is at 12.17 down from December 19 close of 12.50; below 5-day SMA
    • Recent high was 16.90 on December 10; recent low was 11.42 on November 26

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 13 was a green candle with large real body and small shadows
    • 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 +22.89 or +0.7%; the 5-week ATR is 52.34
  • Last week’s pivot point=3159.29, R1=3192.29, R2=3215.78; S1=3135.70, S2=3102.60; R1 pivot level was breached
  • Third up week in a row; fourth in last five weeks and ninth in last ten weeks
  • All time highs; 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 green candle with almost no upper and lower shadows; all time highs
    • %K is above %D; just above 90
    • RSI-9 is above 70 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)
  • Broke above a sideways at 10:00 AM on Thursday; trending higher since 10:00 AM on December 3 in steps
    • RSI-21 rising above 70
    • %K is above %D
  • Above 20-bar EMA, which is above EMA10 of EMA50
  • Bias: Up
30-Minute (e-mini future)
  • Broke above a horizontal channel; 100% extension target near 3214.00 is achieved; 161.8% extension target is near 3220.00
    • RSI-21 is above 60
    • %K is crisscrossing %D higher since 1:30 AM
    • Above 20-bar EMA, at/above EMA10 of EMA50
  • Bias: Up
15-Minute (e-mini future)
  • Bollinger Band (20, 2.0) is drifting sideways to up since 9:30 PM on Thursday
  • The Bollinger Band was relatively narrow from 9:30 PM to 5:30 AM; expanding since with price mostly walking up the upper band
  • Stochastic (9, 1, 3): %K is crossing above %D above 80
  • Bias: Up-Side

Previous Session

Major U.S. indices closed higher on Thursday, December 19 in mixed volume. S&P 500 and NASDAQ Composite traded in higher volume. All but Dow Jones Transportation Average made all time highs.

From Briefing.com:

The S&P 500 closed above the 3200 level for the first time on Thursday in a modest 0.4% advance. The Nasdaq Composite (+0.7%) and Dow Jones Industrial Average (+0.5%) also extended their reach into record territory. The Russell increased 0.3%.

[…]

Today’s session, though, appeared to just be a continuation of the market’s bullish bias. Nine of the 11 S&P 500 sectors finished in positive territory, with the real estate sector (+1.1%) continuing to benefit from a bargain-hunting mindset. Conversely, the energy (-0.1%) and utilities (-0.1%) sectors finished lower.

[…]

U.S. Treasuries edged higher, pushing yields slightly lower across the curve. The 2-yr and 10-yr yields both declined two basis points each to 1.60% and 1.91%, respectively. The U.S. Dollar Index finished little changed at 97.39. WTI crude rose 0.6% (+0.37%) to $61.30/bbl.

[…]

• Existing home sales declined 1.7% m/m in November to a seasonally adjusted annual rate of 5.35 million units (Briefing.com consensus 5.45 million) from a downwardly revised 5.44 million (from 5.46 million) in October.
o The key takeaway from the report is that home sales continue to be held back by the same forces: a lack of available supply and rising prices.
• Initial claims for the week ending December 7 rose by 49,000 to 252,000 (Briefing.com consensus 212,000). That is the highest level of initial claims since September 30, 2017. Continuing claims for the week ending November 30 decreased by 31,000 to 1.667 million.
o The key takeaway from the report is that the latest figure is outside the range of what has become typical reporting for this series, so it may be discounted as aberrant; however, the slowly rising uptick in the four-week moving average for initial claims implies that we may have seen the bottom for this cycle.
• The Conference Board’s Leading Economic Index (LEI) was unchanged in November (Briefing.com consensus +0.1%) following three straight monthly declines. October was revised to -0.2% from -0.1%.
o The key takeaway from the report is the understanding that the LEI went negative (-0.2%) for the six-month period ending November versus growth of 0.3% over the previous six months.
• The Philadelphia Fed Index for December came in at 0.3 (Briefing.com consensus 8.0), well below the 10.4 reading in November.
• The current account deficit for the third quarter totaled $124.1 billion (Briefing.com consensus -$122.0 billion). The second quarter deficit was revised to $125.2 billion from $128.2 billion.

Morning Notes – Wednesday December 18, 2019

Directional Bias For The Day:

  • S&P Futures are little changed
  • Moving sideways since 9:30 AM on Monday
  • The odds are for a sideways day – watch for break above 3203.50 and break below 3192.00 for clarity
  • No key economic data due:

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 3191.08, 3183.63 and 3167.19
  • Critical resistance levels for S&P 500 are 3198.22, 3201.11 and 3204.01
  • Key levels for eMini futures: break above 3203.50, the high of 9:30 AM on Tuesday and break below 3192.25, the low of 2:30 AM

Pre-Open

  • On Tuesday, at 4:00 PM, S&P future (March 2020) closed at 3195.50 and the index closed at 3192.52 – a spread of about +3.00 points; futures closed at 3195.50 for the day; the fair value is +0.00
  • Pre-NYSE session open, futures are little changed to up – at 8:30 AM, S&P 500 futures were up by +3.25; Dow by +28 and NASDAQ up by +11.75

Markets Around The World

  • Markets in the East closed mixed – Shanghai, Tokyo and Seoul closed lower; Hong Kong, Sydney Mumbai and Singapore closed higher
  • European markets are mostly higher – Germany is down
  • Currencies:
    Up Down
    • Dollar index
    • USD/JPY
    • USD/CHF
    • EUR/USD
    • GBP/USD
    • AUD/USD
    • NZD/USD
    • USD/CAD
    • INR/USD
  • Commodities:
    Up Down
    • Sugar
    • Cotton
    • Cocoa
    • Crude Oil
    • NatGas
    • Gold
    • Silver
    • Copper
    • Platinum
    • Palladium
    • Coffee
  • Bonds
    • 10-yrs yield closed at 1.887%, down from December 16 close of 1.892%;
    • 30-years is at 2.313%, up from 2.310%
    • 2-years yield is at 1.631%, up from 1.626%
    • The 10-Year-&-2-Year spread is at 0.256 down from 0.266
  • VIX
    • Is at 12.04 down from December 17 close of 12.29; below 5-day SMA
    • Recent high was 16.90 on December 10; recent low was 11.42 on November 26

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 13 was a green candle with large real body and small shadows
    • 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 +22.89 or +0.7%; the 5-week ATR is 52.34
  • Last week’s pivot point=3159.29, R1=3192.29, R2=3215.78; S1=3135.70, S2=3102.60; R1 pivot level was breached
  • Third up week in a row; fourth in last five weeks and ninth in last ten weeks
  • All time highs; 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 relatively small red candle with almost no lower shadow and an upper shadow that is equal to two times the real body
    • %K is above %D; just above 90
    • RSI-9 is above 70 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 sideways since 10:00 AM on Monday in a narrow range; Trending higher since 10:00 AM on December 3 in steps
    • RSI-21 moving around 55
    • %K has crossed above %D
  • At/above 20-bar EMA, which is above EMA10 of EMA50
  • Bias: Up-Side
30-Minute (e-mini future)
  • Drifting sideways to down since 10:00 AM on Monday; making a double top
    • RSI-21 moving around 50
    • %K is below %D since 4:30 AM
    • At/above 20-bar EMA, at/above EMA10 of EMA50
  • Bias: Side
15-Minute (e-mini future)
  • Bollinger Band (20, 2.0) is drifting sideways to down since 2:15 PM on Monday
  • The Bollinger Band is relatively narrow since 2:30 PM on Monday – neither narrow nor expanding
  • Stochastic (9, 1, 3): %K is crossing above %D above 80
  • Bias: Side

Previous Session

Major U.S. indices closed higher on Tuesday, December 17 in mostly lower volume. Dow Jones Transportation Average traded in higher volume. The day’s price-action was subdued and range was small.

From Briefing.com:

The S&P 500 finished flat (+0.03%) on Tuesday in a tight-ranged, and lackluster, session. It was still technically a record close, though, joining the Dow Jones Industrial Average (+0.1%) and Nasdaq Composite (+0.1%) further in record territory. The Russell 20000 outperformed with a 0.5% gain.

[…]

Six of the 11 sectors did finish lower, though, with the weakest performer being the real estate sector (-1.2%). No other sector finished down more than 0.2% (information technology).

[…]

U.S. Treasuries finished little changed. Both the 2-yr yield and 10-yr yield remained unchanged at 1.63% and 1.89%, respectively. The U.S. Dollar Index increased 0.2% to 97.22. WTI crude rose 1.2%, or $0.69, to $60.90/bbl.

[…]

• Total housing starts increased 3.2% m/m to a seasonally adjusted annual rate of 1.365 million (Briefing.com consensus 1.340 million) while total building permits increased 1.4% m/m to a seasonally adjusted annual rate of 1.482 million (Briefing.com consensus 1.400 million).
o The report contained some noise, yet the key takeaway is that single-family starts (+2.4%) and permits (+0.8%) recorded solid increases.
• Industrial production increased 1.1% in November (Briefing.com consensus 0.8%) after declining a revised 0.9% (from -0.8%) in October. The capacity utilization rate increased to 77.3% (Briefing.com consensus 77.4%) from a revised 76.6% (from 76.7%) in October.
o The key takeaway from the report is the November rebound was fueled by the end of the strike at GM. Excluding motor vehicles and parts, industrial production increased 0.5%.
• The October Job Openings and Labor Turnover Survey showed job openings increase to 7.267 million from a revised 7.032 million in September (from 7.024 million).