Morning Notes – Monday July 15, 2019

Directional Bias For The Day:

  • S&P Futures are higher; moving up since 5:00 AM on July 9
  • The odds are for an up to sideways day – watch for break below 3010.75 for change of fortune
  • Key economic data due:
    • Empire State Manufacturing Index ( 4.3 vs. 1.6; prev. -08.6) at 8:30 AM

Markets Around The World

  • Markets in the East closed mixed – Shanghai, Hong Kong and Mumbai closed up; Tokyo, Sydney, Seoul and Singapore closed down
  • European markets are higher
  • Currencies:
  • Up Down
    • Dollar index
    • USD/JPY
    • AUD/USD
    • NZD/USD
    • EUR/USD
    • GBP/USD
    • USD/CHF
    • USD/CAD
    • USD/INR
  • Commodities:
    Up Down
    • Crude Oil
    • Gold
    • Silver
    • Copper
    • Platinum
    • Palladium
    • Cotton
    • NatGas
    • Sugar
    • Coffee
    • Cocoa
  • Bonds
    • 10-yrs yield is at 2.111%, up from July 12 close of 2.106%;
    • 30-years is at 2.638%, up from 2.633%
    • 2-years yield is at 1.845%, down from 1.857%
    • The 10-Year-&-2-Year spread is at 0.266, up from 0.249

Key Levels:

  • Critical support levels for S&P 500 are 3004.51, 2999.90 and 2988.80
  • Critical resistance levels for S&P 500 are 3021.90, 3029.89 and 3030.65
  • Key levels for eMini futures: break above 3023.50, the high of 3:30 AM and break below 3016.50, the low of 5:30 AM


  • On Friday, at 4:00 PM, S&P future (June contract) closed at 3017.00 and the index closed at 3013.77 – a spread of about +3.25 points; futures closed at 3015.50 for the day; the fair value is +1.50
  • Pre-NYSE session open, futures are higher – at 8:30 AM, S&P 500 futures were up by +6.50; Dow by +51 and NASDAQ by +23.25

Directional Bias Before Open

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

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

  • Under Pressure
  • June 2019 was a large green Piercing or Bullish Engulfing candle that closed near the open of previous week;
  • Sequence of higher highs and higher lows since February 2016 is broken in December since then a new high has been made in May 2019
  • The week ending on July 12 was a green candle with almost no upper shadow and small lower shadow; made all time intra-day and closing high
    • At the upper bound of a broadening pattern
    • Stochastic (9,1, 3): %K and %D are above 90; potential Bearish Divergence for %D
    • RSI (9) is rising and above 65; potential Bearish Divergence
    • The index bounced off the 89-week SMA during the week of June 7
  • Last week was up +23.36 or +0.8% and 5-week ATR is 52.19
  • Last week’s pivot point=2997.04, R1=3030.65, R2=3047.52; S1=2980.17, S2=2946.56; R1 pivot level was breached
  • An up week; fourth in last five weeks and fifth in last ten weeks
  • Last swing low, 2728.81, was the low on June 3, 2018; previous all-time high of 2940.91 was breached during July 1 week
  • Above 10-week EMA, 39-week SMA and 89-week SMA
  • Uptrend resumed
  • A green doji candle with very small upper and lower shadows; continuing the break above a cup-with-handle pattern
    • %K is above %D and above 90; potential chance of Bearish Divergence
    • RSI-9 is above 75; potential Bearish Divergence
    • Sequence of higher highs and higher lows since June 3
  • Above 20-day EMA, 50-day EMA, 100-DAY SMA and 200-day SMA;
  • Uptrend
2-Hour (e-mini future)
  • Moving higher ; from lower-left, on June 12, to upper-right corner, today, on the chart;
    • RSI-21 is mostly moving between 50 and 65 since 6:00 AM on July 10; potential Bearish Divergence
    • %K is crisscrossing %D around 80
    • Above 20-bar EMA, which is above EMA10 of EMA50
  • Bias: Up
30-Minute (e-mini future)
  • Moving higher since 9:00 AM on July 9
    • RSI-21 is moving between 50 and 65 since 3:30 PM on July 11
    • %K is above %D down below 20 since 5:30 AM
  • Above 20-bar EMA, which is above EMA10 of EMA50
  • Bias: Up
15-Minute (e-mini future)
  • Bollinger Band (20, 2.0) is moving sideways since 2:00 PM on July 12
  • The Bollinger Band was relatively narrow from 8:00 PM to 10:00 PM; expanding since
  • Stochastic (9, 1, 3): %K crossed below %D at 8:00 AM
  • Bias: Up

Previous Session

Major U.S. indices closed higher on Friday, July 12 in lower volume. Dow Jones Industrial Average, S&P 500, NASDAQ Composite and Wilshire 5000 Total Market Index are made all time highs – intraday and closing – and are following through on the break above a triple-top/cup-with-handle pattern. Russell 2000 closed down and Dow Jones Transportation Average are quite off their all time highs and NYSE Composite is very close to its.


The major averages ended the week at fresh record highs after a steady daylong push that was paced by the Dow Jones Industrial Average (+0.9%) while the Nasdaq (+0.6%) and S&P 500 (+0.5%) recorded slimmer gains. The small cap Russell 2000 (+0.8%) had a better showing than its large cap peers, but the index has another 10.0% to gain before revisiting its record from last year.

Today’s advance was supported by continued hope for a rate cut taking place as soon as July 31.


Eight out of eleven sectors recorded gains on Friday, with cyclical groups faring better than the countercyclical side. Industrials (+1.8%) and consumer discretionary (+1.1%) spent the day atop the leaderboard to end the week with respective gains of 1.2% and 2.1%.

Industrials rallied alongside heavyweight Boeing (BA 365.33, +6.33, +1.8%) while transport stocks outperformed. The Dow Jones Transportation Average jumped 2.4% with trucking names leading the push. JB Hunt (JBHT 92.94, +5.18, +5.9%) and Ryder (R 57.53, +3.14, +5.8%) spiked near 6.0% apiece, even though peer, U.S. Xpress (USX 4.32, -0.53, -10.9%), warned that industry conditions have worsened.


Treasuries started the day in the red, but a daylong rebound lifted all tenors into the green by the close. The 10-yr yield dipped one basis point to 2.11%. The U.S. Dollar Index returned into the neighborhood of its 200-day moving average (96.77), sliding 0.3% to 96.81.

Today’s economic data was limited to June PPI:
• The index for final demand increased 0.1% m/m in June ( consensus 0.0%), held back by a 3.1% drop in the index for final demand energy, while the index for final demand, excluding food and energy, rose 0.3% m/m ( consensus +0.2%). Those readings left the index for final demand up 1.7% yr/yr, versus 1.8% yr/yr in May. That is the lowest 12-month change since January 2017. Core PPI, however, was up 2.3% yr/yr, which was unchanged from May.
o The key takeaway from the report is that Producer Price Index for June, like the Consumer Price Index for June, didn’t exactly support the case for a 50-basis points cut in July. Some might argue, too, that it didn’t event support the case for a 25-basis points cut in July, yet that’s almost a moot (and mute) argument given the subtext of Mr. Powell’s remarks in his semiannual monetary policy testimony.



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