Market Remarks

Morning Notes – Wednesday July 10, 2019

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are lower; moving lower since 8:30 PM on Tuesday
  • The odds are for a sideways to up day – watch for break above 2987.50 and break below 2971.25 for clarity
  • Key economic data due:
    • Final Wholesale Inventory ( est. 0.4%; prev. 0.4%) at 10:00 AM
    • Fed Chair’s Humphrey-Hawkins Testimony

Markets Around The World

  • Markets in the East closed mixed – Shanghai, Tokyo and Mumbai closed down; Hong Kong, Sydney, Seoul and Singapore closed up
  • European markets are mostly lower – France and Italy are up
  • Currencies:
    Up Down
    • EUR/USD
    • GBP/USD
    • USD/JPY
    • USD/INR
    • Dollar index
    • USD/CHF
    • AUD/USD
    • NZD/USD
    • USD/CAD
  • Commodities:
    Up Down
    • Crude Oil
    • NatGas
    • Copper
    • Platinum
    • Palladium
    • Cotton
    • Cocoa
    • Gold
    • Silver
    • Sugar
    • Coffee
  • Bonds
    • 10-yrs yield closed at 2.054%, up from July 9 close of 2.048%;
    • 30-years is at 2.531%, up from 2.520%
    • 2-years yield is at 1.917%, up from 1.900%
    • The 10-Year-&-2-Year spread is at 0.137, up from 0.134

Key Levels:

  • Critical support levels for S&P 500 are 2972.44, 2963.44 and 2955.92
  • Critical resistance levels for S&P 500 are 2981.90, 2994.03 and 2995.84
  • Key levels for eMini futures: break above 2975.75, the high of 4:00 AM and break below 2971.25, the low of 6:00 AM

Pre-Open

  • On Tuesday, at 4:00 PM, S&P future (June contract) closed at 2983.50 and the index closed at 2979.63 – a spread of about +4.25 points; futures closed at 2982.00 for the day; the fair value is +1.50
  • Pre-NYSE session open, futures are lower – at 8:15 AM, S&P 500 futures were down by -6.75; Dow by -59 and NASDAQ by -17.25

Directional Bias Before Open

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

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 green bullish engulfing candle with small upper and long lower shadows
    • %K is below %D above 80 and turning up
    • 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 up since 2:00 AM on July 9 from a support level, which was a resistance earlier;
    • RSI-21 declined from above 60 at 2:00 PM on July 9 to near 45
    • %K is turning up from near 10 at 4:00 AM and is about to cross over %D
  • At/below 20-bar EMA, which is at/below EMA10 of EMA50
  • Bias: Side
30-Minute (e-mini future)
  • Moving down since 8:30 PM on July 9 after making a double top near 2987.00; bouncing off a broken downtrend line
    • RSI-21 declined from above 65 to near 40
    • %K is crisscrossing %D higher after making Bullish Divergence at 5:30 AM
  • Below 20-bar EMA, which is below EMA10 of EMA50
  • Bias: Side-Down
15-Minute (e-mini future)
  • Bollinger Band (20, 2.0) is drifting down since 1:30 AM
  • The Bollinger Band is relatively narrow from 10:00 PM to 1:30 AM; expanded a bit since with price first walking down the lower band and then bouncing up to the middle band
  • Stochastic (9, 1, 3): %K crisscrossing %D higher since 6:15 AM
  • Bias: Side

Previous Session

Major U.S. indices closed mixed on Tuesday, July 9 in mostly higher volume. Dow Jones Industrial Average, Dow Jones Transportation Average and NYSE Composite closed down. S&P 500, NASDAQ Composite, Russell 2000 and Wilshire 5000 Total Market Index closed higher. S&P 500 traded in higher volume.

From Briefing.com:

The S&P 500 increased 0.1% on Tuesday, as shares of large-cap technology stocks helped the stock market overcome a slow start. Overall, there appeared to be a wait-and-see mindset for potential market-moving catalysts this week, including Fed Chair Powell’s semiannual monetary policy testimony on Capitol Hill tomorrow.

The Nasdaq Composite increased 0.5%, and the Russell 2000 increased 0.1%. The Dow Jones Industrial Average (-0.1%), however, lost ground as shares of 3M (MMM 165.70, -3.49, -2.1%) underperformed after the stock was downgraded to Sector Perform from Outperform at RBC Capital Mkts.

The stock market’s lowest levels of the day came at the open, but investors quickly bought the dip, lifting the major indices from session lows. It still looked like the S&P 500 would close lower for the third straight day, though, until a swarm of buyers in the last 30 minutes of action helped stocks close near session highs.

[…]

U.S. Treasuries finished slightly lower in another tight-ranged session. The 2-yr yield increased one basis point to 1.90%, and the 10-yr yield increased two basis points to 2.05%. The U.S. Dollar Index advanced 0.1% to 97.51. WTI crude increased 0.7% to $57.79/bbl.

[…]

• The NFIB Small Business Optimism Index for June decreased to 103.3 from 105.0 in May.
• The May Job Openings and Labor Turnover Survey showed that job openings decreased to 7.323 million from a revised 7.372 million (from 7.449 million) in April.

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