Morning Notes – Tuesday July 9, 2019

/ July 9, 2019

Directional Bias For The Day:

  • S&P Futures are lower; moving sideways since 11:30 PM on Monday
  • The odds are for a sideways to down day – watch for break above 2979.75 and break below 2963.50 for clarity
  • Key economic data due:
    • JOLTS Jobs Openings (est. 7.51M; prev. 7.45M) at 10:00 AM
    • IBD/TIPP Economic Optimism ( est. 54.1; prev. 53.2)

Markets Around The World

  • Markets in the East closed mostly down – Tokyo and Mumbai closed up
  • European markets are lower
  • Currencies:
    Up Down
    • Dollar index
    • USD/JPY
    • USD/CHF
    • USD/CAD
    • EUR/USD
    • GBP/USD
    • AUD/USD
    • NZD/USD
    • USD/INR
  • Commodities:
    Up Down
    • Crude Oil
    • Silver
    • NatGas
    • Gold
    • Copper
    • Platinum
    • Palladium
    • Sugar
    • Coffee
    • Cotton
    • Cocoa
  • Bonds
    • 10-yrs yield closed at 2.034%, down from July 8 close of 2.048%;
    • 30-years is at 2.520%, down from 2.549%
    • 2-years yield is at 1.888%, up from 1.863%
    • The 10-Year-&-2-Year spread is at 0.134, down from 0.185

Key Levels:

  • Critical support levels for S&P 500 are 2970.09, 2963.25 and 2955.92
  • Critical resistance levels for S&P 500 are 2978.52, 2980.76 and 2984.76
  • Key levels for eMini futures: break above 2970.75, the high of 2:00 AM and break below 2963.50, the low of 4:00 AM

Pre-Open

  • On Monday, at 4:00 PM, S&P future (June contract) closed at 2979.75 and the index closed at 2975.95 – a spread of about +3.75 points; futures closed at 2978.50 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 -9.50; Dow by -92 and NASDAQ by -26.50

Directional Bias Before Open

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

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

Monthly
  • 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
Weekly:
  • The week ending on July 5 was a green spinning top candle with small upper and long lower shadow; made all time intra-day and closing high
    • Stochastics (9,1, 3): %K and %D are above 90; potential Bearish Divergence for %D
    • RSI (9) is above 65; potential Bearish Divergence
    • The index bounced off the 89-week SMA during the week of June 7
  • Last week was up +48.65 or +1.7% and 5-week ATR is 73.32
  • Last week’s pivot point=2979.49, R1=3006.76, R2=3023.11; S1=2963.14, S2=2935.87; R1/R2 pivot levels were breached
  • An up week after a down 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 last week
  • Above 10-week EMA, 39-week SMA and 89-week SMA
  • Uptrend resumed
Daily
  • A small red real candle with small upper and long lower shadows that gapped down at the open; completely within the lower shadow of previous candle
    • %K crossed below %D above 90
    • RSI-9 is above 65 but below its 8-period MA’ Bearish Divergence with the high made on April 30
    • The 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 down since 2:00 AM on July 5 after making a double top; at/near a support level, which was a resistance earlier
    • RSI-21 is declining since 12:00 PM on July 3; made Bearish Divergence on July 5
    • %K is crisscrossing %D down from 100 on July 3; Bearish Divergence on July 5
  • Below 20-bar EMA, which is below EMA10 of EMA50
  • Bias: Down
30-Minute (e-mini future)
  • Moving down since 1:30 AM on July 5; lower highs and lower lows; below a downtrend line; bouncing from a low near 2963.00
    • RSI-21 is mostly moving around or below 40 since 9:00 AM on July 80
    • %K crossed above %D at 5:30 AM
  • At/below 20-bar EMA, which is below EMA10 of EMA50
  • Bias: Down
15-Minute (e-mini future)
  • Bollinger Band (20, 2.0) is drifting down since 3:30 PM on July 5
  • The Bollinger Band is relatively narrow since 3:45 AM
  • Stochastic (9, 1, 3): %K crisscrossing %D above 70
  • Bias: Down-Side

Previous Session

Major U.S. indices closed lower on Monday, July 8 in mixed volume. Dow Jones Industrial Average and Dow Jones Transportation Average traded in higher volume. Indices gapped down at the open and then mostly remained at that level for rest of the day.

From Briefing.com:

The S&P 500 lost 0.5% on Monday, pressured by analyst downgrades and waning hopes for a 50-basis points rate cut at the end of the month. With the major indices near record highs, investors adopted a cautious mindset in front of speeches from several Fed officials this week.

The Dow Jones Industrial Average lost 0.4%, the Nasdaq Composite lost 0.8%, and the Russell 2000 lost 0.9%.

[…]

U.S. Treasuries finished little changed in a quiet session. The 2-yr yield increased one basis point to 1.89%, and the 10-yr yield declined one basis point to 2.03%. The U.S. Dollar Index increased 0.1% to 97.41. WTI crude increased 0.2% to $57.40/bbl.

[…]

• Consumer credit increased by $17.1 billion in May (Briefing.com consensus $17.7 billion) on the heels of an unrevised $17.5 billion in April.
o The key takeaway from the report is that the increase was driven by growth in both nonrevolving and revolving credit.

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