Morning Notes – Thursday July 18, 2019

/ July 18, 2019

Directional Bias For The Day:

  • S&P Futures are lower; mostly moving down since 8:00 AM on July 16; up-sloping bearish flag since 9:00 PM
  • The odds are for a down to sideways day – watch for break above 2993.25 for change of fortune
  • Key economic data due:
    • Philly Fed Manufacturing Index ( est. 5.0 ; prev. 0.3 ) at 8:30 AM
    • Unemployment Claims ( est. 216K ; prev. 209K ) at 8:30 AM
    • CB Leading Index ( est. 0.1% ; prev. 0.0% ) at 10:00 AM

Markets Around The World

    • Markets in the East closed down
    • European markets are mixed – Germany, U.K., Spain and STOXX 600 are down; France, Italy and Switzerland are up
    • Currencies:
Up Down
  • GBP/USD
  • USD/CHF
  • AUD/USD
  • NZD/USD
  • USD/CAD
  • USD/INR
  • Dollar index
  • EUR/USD
  • USD/JPY
  • Commodities:
    Up Down
    • Crude Oil
    • NatGas
    • Gold
      Silver
    • Platinum
    • Cocoa
    • Copper
    • Palladium
    • Sugar
    • Coffee
    • Cotton
  • Bonds
    • 10-yrs yield closed at 2.061%, down from July 16 close of 2.122%;
    • 30-years is at 2.573%, down from 2.632%
    • 2-years yield is at 1.826%, down from 1.850%
    • The 10-Year-&-2-Year spread is at 0.235, down from 0.272

Key Levels:

  • Critical support levels for S&P 500 are 2984.62, 2972.44 and 2963.44
  • Critical resistance levels for S&P 500 are 2994.29, 2998.95 and 3009.53
  • Key levels for eMini futures: break above 2093.00, the low of 10:30 AM on Wednesday and break below 2975.50, the low of 1:30 AM

Pre-Open

  • On Wednesday, at 4:00 PM, S&P future (June contract) closed at 2987.25 and the index closed at 2984.42 – a spread of about +2.75 points; futures closed at 2985.00 for the day; the fair value is +2.25
  • Pre-NYSE session open, futures are down – at 7:30 AM, S&P 500 futures were down by -1.25; Dow by -36 and NASDAQ by -11.75

Directional Bias Before Open

  • Weekly: Uptrend resumed
  • Daily: Uptrend
  • 120-Min:Side-Down
  • 30-Min: Down-Side
  • 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 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
Daily
  • A red candle with very almost no upper and lower shadows;
    • %K is below %D from above 90
    • RSI-9 is below 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 mostly down since 8:00 AM on July 16; Over the past few das – moving higher from lower-left, on June 12, to upper-right corner on the chart;
    • RSI-21 is drifting down since 2:00 AM on Monday; below 30
    • %K crossed above %D
    • Below 20-bar EMA, which is below EMA10 of EMA50
  • Bias: Side-Down
30-Minute (e-mini future)
  • Moving mostly down since 8:00 AM on July 16 after Bearish Divergence on RSI-9 and Stochastic
    • RSI-21 is rising from below 25 at 8:30 PM on Wednesday; just above 40
    • %K is crisscrossing %D higher from below 20
  • 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 drifting sideways since 12:00 AM
  • The Bollinger Band was relatively narrow from 12:00 AM to 4:30 AM; expanding slightly since
  • Stochastic (9, 1, 3): %K is crisscrossing %D around 80
  • Bias: Down-Side

Previous Session

Major U.S. indices closed lower on Wednesday, July 17 in mixed volume. Dow Jones Transportation Average and S&P 500 traded in higher volume. The day’s trend was mostly down and the indices have been moving down since early morning on July 16.

From Briefing.com:

The S&P 500 lost 0.6% on Wednesday, pressured by noticeable losses in the transport stocks after CSX Corp. (CSX 71.38, -8.17, -10.3%) provided disappointing earnings results and guidance. The broader market traded modestly lower for most of the day with losses accelerating into the close.

The Dow Jones Industrial Average lost 0.5%, the Nasdaq Composite lost 0.5%, and the Russell 2000 lost 0.7%.

CSX was presumably the biggest influence on the transports, but earnings warnings from trucking companies Knight-Swift (KNX 35.08, -0.81, -2.3%) and Covenant Transport (CVTI 14.65, -0.51, -3.4%) also contributed to the negative sentiment. Strikingly, the transports were among the best performers yesterday amid easing concerns about a downturn in the sector.

[…]

The S&P 500 industrials sector (-2.2%) was Wednesday’s outright laggard, nearly doubling the losses of the second-worst performing energy sector (-1.2%).

[…]

The S&P 500 utilities (+0.4%) and health care (+0.02%) sectors were the lone sectors that finished higher.

[…]

Despite earnings-related gains in Bank of America (BAC 29.19, +0.20, +0.7%) and U.S. Bancorp (USB 54.22, +1.18, +2.2%), the S&P 500 financial sector (-0.9%) was unable to gain any ground.

[…]

The 2-yr yield declined three basis points to 1.83%, and the 10-yr yield declined six basis points to 2.06%. The U.S. Dollar Index lost 0.2% to 97.21. WTI crude lost 1.4% to $56.78/bbl.

[…]

• Housing starts declined 0.9% m/m in June to a seasonally adjusted annual rate of 1.253 million units (Briefing.com consensus 1.270 million) while building permits declined 6.1% m/m to a seasonally adjusted annual rate of 1.220 million (Briefing.com consensus 1.300 million).
o The key takeaway from the report is that the single-family supply dynamic will remain a limiting issue for the overall housing market as single-family starts were down 0.8% yr/yr while single-family permits were down 4.7% yr/yr.
• The Federal Reserve’s Beige Book for July described the expansion of overall economic activity as “modest.” Most Districts reported a slight increase in sales of retail goods while vehicle sales were little changed. Tourism was described as “broadly solid” while reports concerning the transportation sector were mixed. Home sales increased slightly while construction was little changed. Loan demand increased in all but two Districts.
• The weekly MBA Mortgage Applications Index declined 1.1% following a 2.4% decline in the prior week.

 

 

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