Market Remarks

Morning Notes – Monday August 12, 2019

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are lower;
  • The odds are for a down day with elevated volatility – watch for break above 2009.25 for change of fortune
  • No key economic data due:

Markets Around The World

    • Markets in the East closed mostly higher – Hong Kong was closed; Tokyo, Mumbai and Singapore were closed
    • European markets are mostly lower – Switzerland is up
    • Currencies:
Up Down
  • Dollar index
  • GBP/USD
  • USD/CAD
  • USD/INR
  • EUR/USD
  • USD/JPY
  • USD/CHF
  • AUD/USD
  • NZD/USD
  • Commodities:
    Up Down
    • Gold
    • Silver
    • Palladium
    • Cocoa
    • Crude Oil
    • NatGas
    • Copper
    • Platinum
    • Sugar
    • Coffee
    • Cotton
  • Bonds
    • 10-yrs yield closed at 1.734%, up from August 8 close of 1.716%;
    • 30-years is at 2.248%, up from 2.232%
    • 2-years yield is at 1.637%, up from 1.617%
    • The 10-Year-&-2-Year spread is at 0.097, down from 0.099
  • VIX
    • Is at 19.91 up from August 9 close of 17.97; Below 5-day SMA 19.83
    • 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 2900.15, 2894.47 and 2880.62
  • Critical resistance levels for S&P 500 are 2917.67, 2931.59 and 2938.72
  • Key levels for eMini futures: break above 2909.25, the high of 5:30 AM and break below 2893.00, the low of 7:00 AM

Pre-Open

  • On Friday, at 4:00 PM, S&P future closed at 2918.50 and the index closed at 2918.65 – a spread of about +0.00 points; futures closed at 2919.75 for the day; the fair value is +1.25
  • Pre-NYSE session open, futures are lower – at 8:00 AM, S&P 500 futures were down by -17.25; Dow by -145 and NASDAQ by -49.00

Directional Bias Before Open

  • Weekly: Uptrend Under Pressure
  • Daily: Uptrend Under Pressure
  • 120-Min:Down-Side
  • 30-Min: Side-Down
  • 15-Min: Side-Down
  • 6-Min: Side-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 9 was a small green candle near the lows of last week with an upper shadow equal to the real body and a lower shadow equal to five times the real body
    • Retracing from the upper bound of a broadening pattern
    • Stochastic (9,1, 3): %K is below %D; Bearish Divergence
    • RSI (9) is near 50; Bearish Divergence
    • The index bounced off the 89-week SMA during the week of June 7
  • Last week was down -13.40 or -0.5%; the 5-week ATR is 74.98,
  • Last week’s pivot point=2893.16, R1=2964.21, R2=3009.76; S1=2847.61, S2=2776.56; S1/S2 pivot levels were breached
  • A down week; third 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 red spinning top candle with lower shadow longer than the upper shadow
    • %K is above %D but turning down just below 50
    • RSI-9 is turning down just above 40
  • Below 20-day EMA and 50-day EMA; above 100-DAY SMA and 200-day SMA;
  • Uptrend Under Pressure
2-Hour (e-mini future)
    • Moving sideways to down since 10:00 AM on August 8; breaking below an uptrend line from August 5 lows
      • RSI-21 moving down since 2:00 PM on August 8 from above 75 to near 35
      • %K is below %D since 2:00 AM
    • Below EMA10 of EMA50, which is below 20-bar EMA
    • Bias: Down-Side
30-Minute (e-mini future)
  • Mostly moving sideways to down since 12:00 PM on August 8; breaking below 2900.00 level
    • RSI-21 declined from above 70 at 12:30 PM on August 8 to below 40
    • %K is crisscrossing %D near 20
    • Below 20-bar EMA, which is below EMA10 of EMA50
  • Bias: Side-Down
15-Minute (e-mini future)
  • Bollinger Band (20, 2.0) is moving sideways to down since 1:00 PM on August 8
  • The Bollinger Band was narrow from 6:30 PM to 4:00 AM; expanding since with price walking down the lower band
  • Stochastic (9, 1, 3): %K is above %D since 7:15 AM; near 50
  • Bias: Side-Down

Previous Session

Major U.S. indices closed lower on Friday, August 8. The volume traded was lower than that on Thursday but higher than the 10-day average. Most indices made red harami candle. The indices gapped down at the open and then recovered some of the losses by midday.

For the week, major indices closed lower. The volume traded was lower than that last week but higher than 10-week average. Five of the S&P sectors – Energy, Industrial, Financials, Technology and Telecom – closed lower for the week.

From Briefing.com:

The stock market wrapped up a volatile week on lower note, leaving the S&P 500 down 0.7% on Friday. Familiar trade concerns appeared to hinder buying conviction after a three-day advance in the benchmark index.

The Dow Jones Industrial Average lost 0.3%, the Nasdaq Composite lost 1.0%, and the Russell 2000 lost 1.3%.

[…]

Eight of the 11 S&P 500 sectors finished lower, led by the energy (-1.3%) and information technology (-1.3%) sectors. Energy stocks fell despite the sharp increase in oil prices ($54.61/bbl, +$2.09, +4.0%), while the tech sector was pressured by shares of semiconductor companies, many of which derive substantial revenue from China. The Philadelphia Semiconductor Index fell 1.8%.

Conversely, the defensive-oriented health care (+0.2%), real estate (+0.1%), and utilities (+0.04%) sectors were the lone sectors that finished higher.

[…]

U.S. Treasuries finished slightly lower, pushing yields higher across the curve. The 2-yr yield and the 10-yr yield increased two basis points each to 1.63% and 1.73%, respectively. The U.S. Dollar Index declined 0.1% to 97.54.

[…]

• The index for final demand increased 0.2% m/m in July (Briefing.com consensus +0.2%) while the index for final demand, excluding food and energy, decreased 0.1% m/m (Briefing.com consensus +0.2%). The m/m readings left the index for final demand up 1.7% yr/yr, unchanged from June. The index remains at its lowest level since January 2017. Core PPI was up 2.1% yr/yr, down from 2.3% in June.
o The key takeaway from the report is that inflationary pressure remains muted.

 

 

 

 

 

 

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