Market Remarks

Morning Notes – Friday August 9, 2019

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are lower;
  • Drifting down since NYSE close
  • The odds are for a sideways to a down day with elevated volatility – watch for break above 2935.75 for change of fortune
  • Key economic data due:
    • PPI (est. 0.2%; prev. 0.1%) at 8:30 AM
    • Core PPI ( est. 0.2%; pre. 0.3%) at 8:30 AM

Markets Around The World

    • Markets in the East closed mostly higher – Shanghai and Hong Kong were down; Singapore was closed
    • European markets are mostly lower – Switzerland is up
    • Currencies:
Up Down
  • EUR/USD
  • AUD/USD
  • NZD/USD
  • USD/INR
  • Dollar index
  • GBP/USD
  • USD/JPY
  • USD/CHF
  • USD/CAD
  • Commodities:
    Up Down
    • Crude Oil
    • Gold
    • Silver
    • Palladium
    • Sugar
    • NatGas
    • Copper
    • Platinum
    • Coffee
    • Cotton
    • Cocoa
  • Bonds
    • 10-yrs yield closed at 1.716%, up from August 7 close of 1.684%;
    • 30-years is at 2.232%, up from 2.197%
    • 2-years yield is at 1.617%, up from 1.605%
    • The 10-Year-&-2-Year spread is at 0.099, up from 0.079
  • VIX
    • At 18.53 up from August 8 close of 16.91; Below 5-day SMA 19.90
    • Recent high was 24.81 on August 5; recent low was 11.69 on July 25

Key Levels:

  • Critical support levels for S&P 500 are 2925.31, 2912.77 and 2894.47
  • Critical resistance levels for S&P 500 are 2938.72, 2945.23 and 2964.19
  • Key levels for eMini futures: break above 2930.50, the high of 2:30 AM and break below 2918.00, the low of 7:00 AM

Pre-Open

  • On Thursday, at 4:00 PM, S&P future closed at 2939.00 and the index closed at 2938.09 – a spread of about +1.00 points; futures closed at 2940.00 for the day; the fair value is -1.00
  • Pre-NYSE session open, futures are lower – at 7:45 AM, S&P 500 futures were down by -19.25; Dow by -145 and NASDAQ by -66.75

Directional Bias Before Open

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

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

Monthly
  • Under Pressure
  • July formed a shooting star type doji at all time highs
    • Stochastic is forming a Bearish Divergence
    • RSI-9 is below a downtrend line from January 2018 high; forming a Bearish Divergence
  • June 2019 was a large green Piercing or Bullish Engulfing candle that closed near the open of previous week; May was large Bearish Engulfing candle that closed near the lows
  • 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 August 2 was a large red bearish engulfing that closed below past five weeks’ close; small lower shadow and almost no upper shadow
    • Retracing from the upper bound of a broadening pattern
    • Stochastic (9,1, 3): %K crossed below %D from above 90; potential Bearish Divergence for %D
    • RSI (9) is turning down from 65; potential Bearish Divergence
    • The index bounced off the 89-week SMA during the week of June 7
  • Last week was up -93.81 or -3.1%; the 5-week ATR is 62.48,
  • Last week’s pivot point=2957.26, R1=3000.40, R2=3069.76; S1=2888.90, S2=2845.76; S1/S2/S3 pivot levels were breached
  • A down week; second in last five weeks and fourth 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
  • At/above 10-week EMA; above 39-week SMA and 89-week SMA
  • Uptrend Under Pressure
Daily
  • A large green candle that gapped up at the open; almost no upper and lower shadows; closing the down gap of Monday
    • %K is above %D; above 50
    • RSI-9 is turning up; near 50
  • Below 20-day EMA and 50-day EMA; above 100-DAY SMA and 200-day SMA;
  • Uptrend Under Pressure
2-Hour (e-mini future)
    • Continuing the bounce up from a low of 2775.75 at 6:00 PM on Monday; advancing higher in steps; drifting down since 4:00 PM on Thursday from a high of 2940.75, just above the 61.8% retracement of the decline from all time high
      • RSI-21 moving down from above 75 to near 55
      • %K crossing below %D at 4:00 PM on Thursday from above 90
    • Above 20-bar EMA, which is above EMA10 of EMA50
    • Bias: Down-Side
30-Minute (e-mini future)
  • Mostly moving sideways since 12:00 PM on Thursday between 2930.00 and 2920.00;
    • RSI-21 declined from above 70 to just above 50 after making a Bearish Divergence at 4:00 PM
    • %K is crisscrossing %D near 20
    • At/below 20-bar EMA, which is above EMA10 of EMA50
  • Bias: Up-Side
15-Minute (e-mini future)
  • Bollinger Band (20, 2.0) is drifting sideways to down since 3:30 PM on August 8
  • The Bollinger Band narrowed since 0:30 AM
  • Stochastic (9, 1, 3): %K is crisscrossing %D near 30
  • Bias: Up-Side

Previous Session

Major U.S. indices closed higher on Thursday, August 8. The volume traded was lower than that on Wednesday but higher than the 10-day average. The indices gapped up at the open and then climbed higher and closed near the high for the day.

From Briefing.com:

The stock market finished decisively in the green on Thursday, as trade angst subsided and investors embraced a risk-on mindset. The S&P 500 advanced 1.9%, which extended its two-day comeback to 112 points, or 4.0%, from its session low on Wednesday.

The Dow Jones Industrial Average increased 1.4%, the Nasdaq Composite increased 2.2%, and the Russell 2000 increased 2.1%.

[…]

Interestingly, the S&P 500 traded just below its 50-day moving average (2934) for most of the afternoon before finally breaking above the key technical level late in the session. The benchmark index held above the level on a closing basis.

All 11 S&P 500 sectors finished higher by at least 1.0%. The energy sector (+2.9%) led the advance as oil prices ($52.52/bbl, +$1.38, +2.7%) rebounded, followed by the information technology (+2.4%), communication services (+2.2%), and consumer discretionary (+2.0%) sectors.

[…]

U.S. Treasuries were under noticeable selling pressure today, which sent the 10-yr yield up 11 basis points to 1.79% at one point during the session. Buyers gradually came back, ultimately leaving the benchmark yield up three basis points to 1.72%. The 2-yr yield finished also finished three basis points higher at 1.61%. The U.S. Dollar Index increased 0.1% to 97.60.

[…]

• Initial jobless claims for the week ending August 3 decreased by 8,000 to 209,000 (Briefing.com consensus 213,000). Continuing claims for the week ending July 27 decreased by 15,000 to 1.684 mln.
o The key takeaway from the report is that initial claims continue hovering near multi-decade lows.
• Wholesale inventories were unchanged in June (Briefing.com consensus 0.2%) on top of an unrevised 0.4% increase in May. Wholesale sales decreased 0.3% in June after decreasing a revised 0.6% (from +0.1%) in May.
o The key takeaway from the June report and the May revision is that the gap between inventory growth and sales growth is widening, which should exert some pressure on prices.

 

 

 

 

 

 

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