Morning Notes – Tuesday January 14, 2020

Directional Bias For The Day:

  • S&P Futures are little changed to lower;
  • The odds are for a sideways to an up day – watch for break below 3275.75 for change of fortune
  • Key economic data due:
    • CPI ( 0.2% vs. 0.2% est.; prev. 0.3%) at 8:30 AM
    • Core CPI (0.1% vs. 0.2% est.; prev. 0.2%) at 8:30 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 3280.01, 3268.43 and 3260.86
  • Critical resistance levels for S&P 500 are 3294.70, 3301.26 and 3314.40
  • Key levels for eMini futures: break above 3292.50, the high of 4:30 AM and break below 3275.25, the low of 3:00 AM

Pre-Open

  • On Monday, at 4:00 PM, S&P future (March 2020) closed at 3288.50 and the index closed at 3288.13 – a spread of about +0.25 points; futures closed at 3289.75 for the day; the fair value is -0.50
  • Pre-NYSE session open, futures are lower to little changed – at 8:15 AM, S&P 500 futures were down by -3.75; Dow by -9 and NASDAQ by -9.00

Markets Around The World

  • Markets in the East closed mostly up – Shanghai and Hong Kong were down;
  • European markets are mostly down – U.K. and STOXX 600 are higher
  • Currencies:
    Up Down
    • Dollar index
    • USD/JPY
    • USD/CAD
    • INR/USD
    • EUR/USD
    • GBP/USD
    • USD/CHF
    • AUD/USD
    • NZD/USD
  • Commodities:
    Up Down
    • Crude Oil
    • NatGas
    • Copper
    • Palladium
    • Sugar
    • Coffee
    • Cotton
    • Cocoa
    • Gold
    • Silver
    • Platinum
  • Bonds
    • 10-yrs yield closed at 1.848%, up from January 10 close of 1.825%;
    • 30-years is at 2.307%, up from 2.284%
    • 2-years yield is at 1.592%, up from 1.576%
    • The 10-Year-&-2-Year spread is at 0.256 up from 0.249
  • VIX
    • Is at 12.53 up from January 13 close of 12.32; below 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:

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 10 was a bullish engulfing 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 +30.50 or +0.9%; the 5-week ATR is 51.06
  • Last week’s pivot point=3254.33, R1=3294.01, R2=3322.68; S1=3225.66, S2=3185.98; R1/R2 pivot levels were breached
  • An up week following the first down week 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
Daily
  • A green candle with almost no upper and lower shadows that closed above Friday’s bearish engulfing candle
    • %K is crossing above %D above 90
    • RSI-9 is turning up above 70; above 8-day SMA;
  • Above 20-day EMA, 50-day EMA, 100-day SMA and 200-day SMA;
  • Uptrend
2-Hour (e-mini future)
  • Moving sideways to up since 2:00 PM on January 9; essentially moving sideways to up since 4:00 PM on December 26, though showing signs of breaking out;
    • RSI-21 declined from above 90 at 6:00 PM, after making a bearish divergence, to near 50;
    • %K is crisscrossing %D lower
  • A broadening pattern is emerging; price is near its upper bound
  • At/above 20-bar EMA, which is above EMA10 of EMA50
  • Bias: Up
30-Minute (e-mini future)
  • Moving sideways since 3:00 PM on January 8;
    • RSI-21 is moving around 50 since 4:00 AM after declining from above t 65 to below 40
    • %K is below %D since 5:00 AM
  • At/above 20-bar EMA, which is above EMA10 of EMA50
  • Bias: Side
15-Minute (e-mini future)
  • Bollinger Band (20, 2.0) moving sideways to down since 9:15 PM
  • The Bollinger Band narrowed from 9:15 PM to 2:45 AM; expanding since with price first walking down the lower band and then bouncing to the mid-band
  • Stochastic (9, 1, 3): %K is crisscrossing %D higher since 6:00 AM;
  • Bias: Up-Sde

Previous Session

Major U.S. indices closed higher on Monday, January 13 in mostly higher volume. S&P 500 traded in lower volume. Major indices mostly recovered the losses suffered on Friday. Dow Jnes Industrial Average was an exception.

From Briefing.com:

The S&P 500 (+0.7%) and Nasdaq Composite (+1.0%) closed at record highs on Monday in a continuation trade of the market’s bullish momentum. The Dow Jones Industrial Average increased 0.3%, and the Russell 2000 increased 0.7%.

[…]

In turn, ten of the 11 S&P 500 sectors pushed higher, with leadership coming from the materials (+1.4%), information technology (+1.3%), and real estate (+1.2%) sectors. Apple (AAPL 316.96, +6.63, +2.1%) remained an influential force after its price target was raised to $375 from $300 at D.A. Davidson.

[…]

The health care sector (-0.4%) was the lone holdout amid disappointing guidance from Abiomed (ABMD 168.10, -20.96, -11.1%), weakness in the insurance stocks after Senator Bernie Sanders (I-VT) took the lead in the latest poll in Iowa, and a relatively quiet first day at the JPMorgan Healthcare Conference.

[…]

U.S. Treasuries finished slightly lower in a tight-ranged session. The 2-yr yield and the 10-yr yield increased two basis points each to 1.58% and 1.85%, respectively. The U.S. Dollar Index finished flat at 97.36. WTI crude fell 1.5%, or $0.87, to $58.12/bbl.

Monday’s economic data was limited to the Treasury Budget for December, which showed a deficit of $13.3 billion (Briefing.com consensus -$15.0 billion) versus a deficit of $13.5 billion in the same period a year ago. The budget deficit over the last 12 months is $1.022 trillion versus $1.022 trillion in November.

Morning Notes – Monday January 13, 2020

Directional Bias For The Day:

  • S&P Futures are higher;
  • The odds are for a sideways to an up day – watch for break below 3271.75 for change of fortune
  • No key economic data due:

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 3260.86, 3251.95 and 3238.35
  • Critical resistance levels for S&P 500 are 3277.58, 3282.99 and 3291.86
  • Key levels for eMini futures: break above 3278.25, the high of 5:00 AM and break below 3271.25, the low of 7:00 AM

Pre-Open

  • On Friday, at 4:00 PM, S&P future (March 2020) closed at 3265.75 and the index closed at 3265.35 – a spread of about +0.55 points; futures closed at 3264.75 for the day; the fair value is +1.00
  • Pre-NYSE session open, futures are higher – at 8:30 AM, S&P 500 futures were up by +11.50; Dow by +106 and NASDAQ by +41.50

Markets Around The World

  • Markets in the East closed mostly up – Sydney and Singapore were down; Tokyo was closed
  • European markets are mostly down – U.K. and France are higher
  • Currencies:
    Up Down
    • Dollar index
    • EUR/USD
    • USD/JPY
    • AUD/USD
    • NZD/USD
    • GBP/USD
    • USD/CHF
    • USD/CAD
    • INR/USD
  • Commodities:
    Up Down
    • Crude Oil
    • NatGas
    • Copper
    • Palladium
    • Sugar
    • Cotton
    • Gold
    • Silver
    • Platinum
    • Coffee
    • Cocoa
  • Bonds
    • 10-yrs yield closed at 1.841%, down from January 9 close of 1.858%;
    • 30-years is at 2.304%, down from 2.330%
    • 2-years yield is at 1.576%, down from 1.584%
    • The 10-Year-&-2-Year spread is at 0.265 down from 0.274
  • VIX
    • Is at 12.71 up from January 10 close of 12.56; below 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:

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 10 was a bullish engulfing 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 +30.50 or +0.9%; the 5-week ATR is 51.06
  • Last week’s pivot point=3254.33, R1=3294.01, R2=3322.68; S1=3225.66, S2=3185.98; R1/R2 pivot levels were breached
  • An up week following the first down week 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
Daily
  • A bearish engulfing candle with almost no upper shadow and small lower shadow; made all time intra-day high
    • %K is crossing below %D; potential %D Bearish Divergence
    • RSI-9 is turning down from above 70; 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)
  • Moving sideways since 2:00 PM on January 9; essentially moving sideways since 4:00 PM on December 26, though showing signs of breaking out;
    • RSI-21 rising since 4:00 PM on Friday from near 30 to above 50
    • %K is above %D near 80
  • A broadening pattern is emerging; price is near its upper bound
  • At/above 20-bar EMA, which is above EMA10 of EMA50
  • Bias: Up-Side
30-Minute (e-mini future)
  • Moving sideways since 3:00 PM on January 8;
    • RSI-21 is moving around 50 since 8:00 PM on Sunday
    • %K is above %D
  • At/above 20-bar EMA, which is at/above EMA10 of EMA50
  • Bias: Side
15-Minute (e-mini future)
  • Bollinger Band (20, 2.0) moving with an up bias since  8:15 PM on Sunday
  • The Bollinger Band was narrow from 00:45 AM to 3:30 AM; expanding lightly since
  • Stochastic (9, 1, 3): %K is above %D since 7:00 AM;
  • Bias: Side-Up

Previous Session

Major U.S. indices closed lower on Friday, January 10 in mixed volume. Dow Jnes Industrial Average and NASDAQ Composite traded in lower volume. Most major indices made bearish engulfing and are showing potential stochastic bearish divergence. continue to breakout from few day’s consolidation.

For the week, major indices advanced, except Russell 2000, in higher volume. Four S&P sectors – Energy, Materials, Industrials and Finance closed down for the week.

From Briefing.com:

The stock market hit new highs on Friday but succumbed to profit taking late in the session, as the December employment report failed to generate much excitement. The Dow Jones Industrial Average (-0.5%) hit 29,000 for the first time early in the session before finishing slightly lower with the S&P 500 (-0.3%), Nasdaq Composite (-0.5%), and Russell 2000 (-0.4%).

[…]

The S&P 500 financials (-0.8%), industrials (-0.7%), energy (-0.6%), and consumer discretionary (-0.5%) sectors were today’s laggards.
The defensive-oriented real estate (+1.0%), utilities (+0.2%), and health care (+0.04%) sector finished higher.

[…]

U.S. Treasuries ended the session on a higher note as part of a defensive-oriented trade. The 2-yr yield declined one basis point to 1.56%, and the 10-yr yield declined three basis points to 1.83%. The U.S. Dollar Index declined 0.1% to 97.36. WTI crude fell 0.9%, or $0.55, to $58.99/bbl.

[…]

• December nonfarm payrolls increased by 145,000 (Briefing.com consensus 160,000), private sector payrolls increased by 139,000 (Briefing.com consensus 157,000), the unemployment rate was 3.5% (Briefing.com consensus 3.5%), and average hourly earnings were up 0.1% (Briefing.com consensus +0.3%).
o The key takeaway from the report, which included updates to the seasonal adjustment factors for the labor force series derived from the household survey, was that average hourly earnings and the average workweek were both weaker than expected. That may temper any inflation concerns, but at the same time it is apt to temper consumer spending activity and overall GDP growth expectations for the fourth quarter.
• Wholesale inventories decreased 0.1% m/m in November (Briefing.com consensus +0.2%) after increasing 0.1% in October. Wholesale sales surged 1.5% after declining 0.9% in October.
o The key takeaway from the report is that sales activity was strong in November, but it will still prove difficult for wholesalers to gain pricing power given that inventory growth remains well ahead of sales growth on a yr/yr basis.

Morning Notes – Friday January 10, 2020

Directional Bias For The Day:

  • S&P Futures are higher;
  • Non-Farm Payroll day
  • The odds are for an up day – watch for reaction following payroll report; watch break below 3264.25 for change of fortune
  • Key economic data due:
    • Non-Farm Employment Change ( 162K est.; prev. 266K ) at 8:30 AM
    • Average Hourly Earnings ( 0.3% est. ; prev. 0.2%) at 8:30 AM
    • Unemployment Rate ( 3.5% est.; prev. 3.5% ) at 8:30 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 3275.12, 3269.74 and 3263.67
  • Critical resistance levels for S&P 500 are 3278.96, 3283.23 and 3290.87
  • Key levels for eMini futures: break above 3286.75, the high of 6:00 AM and break below 3279.50, the low of 3:30 AM

Pre-Open

  • On Thursday, at 4:00 PM, S&P future (March 2020) closed at 3275.50 and the index closed at 3274.70 – a spread of about +0.75 points; futures closed at 3276.00 for the day; the fair value is -0.50
  • Pre-NYSE session open, futures are higher – at 6:45 AM, S&P 500 futures were up by +9.50; Dow by +65 and NASDAQ by +39.50

Markets Around The World

  • Markets in the East closed mostly higher – Shanghai was down
  • European markets are higher
  • Currencies:
    Up Down
    • Dollar index
    • GBP/USD
    • USD/JPY
    • USD/CHF
    • AUD/USD
    • NZD/USD
    • USD/CAD
    • INR/USD
    • EUR/USD
  • Commodities:
    Up Down
    • Crude Oil
    • NatGas
    • Copper
    • Platinum
    • Palladium
    • Sugar
    • Coffee
    • Cotton
    • Cocoa
    • Gold
    • Silver
  • Bonds
    • 10-yrs yield closed at 1.858%, down from January 8 close of 1.874%;
    • 30-years is at 2.330%, down from 2.358%
    • 2-years yield is at 1.584%, up from 1.581%
    • The 10-Year-&-2-Year spread is at 0.274 down from 0.293
  • VIX
    • Is at 12.41 down from January 9 close of 12.54; below 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:

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 with almost no upper and lower shadows; all time highs and breaking away from past few days’ consolidation
    • %K is crossing above %D; potential %D Bearish Divergence
    • RSI-9 is turning up 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 up since 8:00 PM on January 7 after a sharp sudden decline; essentially moving sideways since 4:00 PM on December 26, though showing signs of breaking out;
    • RSI-21 is flattening above 70
    • %K is crisscrossing %D near 80
  • A broadening pattern is emerging; price breaking its upper bound
  • Above 20-bar EMA, which is above EMA10 of EMA50
  • Bias: Up
30-Minute (e-mini future)
  • Moving up since 7:30 PM on January 7 after a sudden sharp decline of nearly 50 points
    • RSI-21 is moving around 60 since 11:00 AM on January 8;
    • %K is crossing above %D at 4:00 AM from near 30
  • Above 20-bar EMA, which is above EMA10 of EMA50
  • Bias: Up
15-Minute (e-mini future)
  • Bollinger Band (20, 2.0) is trending up since 2:00 AM on Wednesday
  • The Bollinger Band is relatively stable and small since 2:00 AM on Thursday
  • Stochastic (9, 1, 3): %K crossed below %D at 6:30 AM; potential Bearish Divergence
  • Bias: Up

Previous Session

Major U.S. indices closed higher on Thursday, January 9 in lower volume. Major indices continue to breakout from few day’s consolidation. Most major indices except Dow Jones Transportation Average and Russell 2000 made all time highs. On one S&P sectors – Real Estate – closed down.

From Briefing.com:

The S&P 500 rose 0.7% and closed at a record high on Thursday, as the market extended Wednesday’s relief rally amid gains across all 11 S&P 500 sectors. The Dow Jones Industrial Average (+0.7%) and Nasdaq Composite (+0.8%) also closed at record highs, while the Russell 2000 increased just 0.1%.

[…]

U.S. Treasuries finished the session slightly higher. The 2-yr yield declined one basis point to 1.57%, and the 10-yr yield declined two basis points to 1.86%. The U.S. Dollar Index increased 0.1% to 97.44. WTI crude declined 0.1% to $59.54/bbl.

[…]

• Initial jobless claims for the week ending January 4 decreased by 9,000 to 214,000 (Briefing.com consensus 225,000). Continuing claims for the week ending December 28 increased by 75,000 to 1.803 million.
o The key takeaway from the report is that initial claims have settled back down at lower levels, which reflect ongoing tightness in the labor market.

Morning Notes – Thursday January 9, 2020

Directional Bias For The Day:

  • S&P Futures are higher; bounced up following the drop during the last half-hour of trading on Wednesday; up 18 point from that low; moving sideways since 2:30 AM
  • The odds are for an up day – watch for break below 3257.75 for change of fortune
  • Key economic data due:
    • Unemployment Claims (214K vs.221K est.; prev. 223K ) at 8:30 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 3251.95, 3238.35 and 3232.58
  • Critical resistance levels for S&P 500 are 3267.07, 3282.66 and 3298.26
  • Key levels for eMini futures: break above 3274.00, the high of 3:30 AM and break below 3257.75, the low of 10:00 PM

Pre-Open

  • On Wednesday, at 4:00 PM, S&P future (March 2020) closed at 3253.75 and the index closed at 3253.05 – a spread of about +0.75 points; futures closed at 3260.25 for the day; the fair value is -6.50
  • Pre-NYSE session open, futures are higher – at 8:15 AM, S&P 500 futures were up by +10.00; Dow by +90 and NASDAQ by +48.50

Markets Around The World

  • Markets in the East closed higher
  • European markets are mostly up – Spain is down
  • Currencies:
    Up Down
    • Dollar index
    • EUR/USD
    • USD/JPY
    • USD/CAD
    • GBP/USD
    • USD/CHF
    • AUD/USD
    • NZD/USD
    • INR/USD
  • Commodities:
    Up Down
    • Crude Oil
    • Platinum
    • Palladium
    • Sugar
    • Coffee
    • Cocoa
    • NatGas
    • Gold
    • Silver
    • Copper
    • Cotton
  • Bonds
    • 10-yrs yield closed at 1.874%, up from January 7 close of 1.827%;
    • 30-years is at 2.358%, up from 2.305%
    • 2-years yield is at 1.581%, up from 1.544%
    • The 10-Year-&-2-Year spread is at 0.293 up from 0.283
  • VIX
    • Is at 13.13 down from January 8 close of 13.45; below 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 with almost no lower shadow and upper shadow almost equal to the real body
    • %K is crossing above %D from near 50; potential %D Bearish Divergence
    • RSI-9 is turning up above 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)
  • Moving up since 8:00 PM on January 7 after a sharp sudden decline; essentially moving sideways since 4:00 PM on December 26, though showing signs of breaking out;
    • RSI-21 is flattening just near 70
    • %K is crisscrossing %D near 75
  • A broadening pattern is emerging; price near its upper bound
  • Above 20-bar EMA, which is above EMA10 of EMA50
  • Bias: Side-Up
30-Minute (e-mini future)
  • Moving up since 7:30 PM on January 7 after a sudden sharp decline of nearly 50 points
    • RSI-21 is moving around 60 since 11:00 AM on January 8;
    • %K is crossing above %D near 20 after declining from above 90 at 2:30 AM
  • At/above 20-bar EMA, which is above EMA10 of EMA50
  • Bias: Side-Up
15-Minute (e-mini future)
  • Bollinger Band (20, 2.0) is trending up since 2:00 AM on Wednesday
  • The Bollinger Band is narrowing since 7:00 AM
  • Stochastic (9, 1, 3): %K is crossing above %D near 30 at 8:00 AM
  • Bias: Up

Previous Session

Major U.S. indices closed higher on Wednesday, January 8 in higher volume. Major indices made breakout candle patterns. Most major indices except Dow Jones Transportation Average and Russell 2000 made all time highs. On two S&P sectors – Energy and Utility – closed down.

From Briefing.com:

The S&P 500 (+0.5%) set a new intraday high on Wednesday, as investors were relieved to hear that the situation in Iran may not escalate militarily beyond the actions taken by Iran last night. The Nasdaq Composite (+0.7%) closed at a record high, the Dow Jones Industrial Average gained 0.6%, and the Russell 2000 gained 0.3%. Stocks did fade into the close, though.

[…]

The information technology (+1.0%) and communication services (+0.7%) sectors outperformed, while the energy sector (-1.7%) fell behind amid a retreat in oil prices ($59.62, -3.06, -4.9%). WTI crude futures dropped below $60/bbl following bearish inventory data and receding concerns about production disruptions.

[…]

U.S. Treasuries declined alongside the advance in equities, driving yields higher across the curve. The 2-yr yield rose four basis points to 1.58%, and the 10-yr yield rose five basis points to 1.87%. The U.S. Dollar Index increased 0.3% to 97.30. Gold futures fell 0.9% to $1560.50/ozt.

[…]

• The ADP Employment Change Report showed an estimated 202,000 positions were added to private sector payrolls in December (Briefing.com consensus 155,000) on top of an upwardly revised 124,000 (from 67,000) in November.
• Consumer credit increased by $12.5 bln in November (Briefing.com consensus $17.5 bln) after increasing by $18.9 bln in October.
o The key takeaway from the report is that the November increase was driven entirely by nonrevolving credit.

Morning Notes – Wednesday January 8, 2020

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:

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

Key Levels:

  • 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

Pre-Open

  • 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
  • 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
    • Copper
    • Platinum
    • Palladium
    • Crude Oil
    • Gold
    • Silver
    • Sugar
    • Coffee
    • Cotton
    • Cocoa
  • Bonds
    • 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
  • VIX
    • 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:

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 small red harami candle;
    • %K is below %D from above 70; potential %D Bearish Divergence
    • RSI-9 is turning down 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; declined sharply during Asian session from 3254.50 to 3181.00 and now bounced up the near NYSE session close on January 7
    • RSI-21 bounced up from below 20 to above 50
    • %K crossed above %D at 8:00 PM on Tuesday after making %K bullish divergence
  • A broadening pattern is emergning
  • Above EMA10 of EMA50, which is above 20-bar EMA
  • Bias: Up-Side
30-Minute (e-mini future)
  • Essentially moving sideways since December 20; at January 2 Asian session level; bounced off at 7:30 PM on Tuesday after a sharp decline from 3233.75 at 6:0 PM to 3181.00
    • RSI-21 bounced from near 20 to near 60
    • %K is crisscrossing %D around 70 since 10:30 PM
  • Below 20-bar EMA, which is above EMA10 of EMA50
  • Bias: Up-Side
15-Minute (e-mini future)
  • Bollinger Band (20, 2.0) is trending up since 2:00 AM
  • The Bollinger Band was relatively small from 2:00 AM to 5:15 AM after a sudden broadening from 4:40 PM to 1:30 AM; expanding since 5:30 AM with price mostly walking up the upper band
  • Stochastic (9, 1, 3): %K is crisscrossing %D lower since 6:00 AM
  • Bias: Up-Side

Previous Session

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.

From Briefing.com:

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.