Market Remarks

Morning Notes – Friday August 30, 2019

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are higher;
  • The odds are for an up day – watch for break below 2934.25 for change of fortune
  • Key economic data due:
    • Personal Spending (0.6% vs. 0.5% est.; prev. 0.3%) at 8:30 AM
    • Core PCE Price Index (0.2% vs. 0.3% est.; prev. 0.2%) at 8:30 AM
    • Personal Income (0.1% vs. 0.3%; prev. 0.5%) at 8:30 AM
    • Chicago PMI ( 48.1 vs. 0.2% est.; prev. 44.4) at 9:45 AM
    • Revised UoM Consumer Sentiment (92.5 est.; prev. 92.1) at 10:00 AM
    • Revise UoM Inflation Expectations (prev. 2.7%) at 10:00 AM

Markets Around The World

    • Markets in the East closed mostly up – Shanghai closed down
    • European markets are higher
    • Currencies:
Up Down
  • Dollar index
  • USD/CHF
  • AUD/USD
    • EUR/USD
    • GBP/USD
    • USD/JPY
    • NZD/USD
    • USD/CAD
    • USD/INR

 
  • Commodities:
    Up Down
    • Gold
    • Silver
    • Copper
    • Platinum
    • Palladium
    • Coffee
    • Cotton (Unch.)
    • Cocoa
    • Crude Oil
    • NatGas
    • Sugar
  • Bonds
    • 10-yrs yield is at 1.513%, down from August 29 close of 1.516%;
    • 30-years is at 1.975%, down from 1.979%
    • 2-years yield is at 1.528%, unchanged
    • The 10-Year-&-2-Year spread is at -0.015 down from -0.012
  • VIX
    • Is at 17.16 down from August 29 close of 17.88; below 5-day SMA 18.80
    • Recent high was 21.64 on August 28; recent low was 15.51 on August 21

Key Levels:

  • Critical support levels for S&P 500 are 2921.71, 2915.25 and 2905.67
  • Critical resistance levels for S&P 500 are 2944.01, 2964.19 and 2979.93
  • Key levels for eMini futures: break above 2946.50, the high of 5:30 AM and break below 2940.25, the low of 7:00 AM

Pre-Open

  • On Thursday, at 4:00 PM, S&P future closed at 2924.75 and the index closed at 2924.58 – a spread of about +0.25 points; futures closed at 2926.75 for the day; the fair value is -2.00
  • Pre-NYSE session open, futures are higher – at 9:00 AM, S&P 500 futures were up by +16.25; Dow by +140 and NASDAQ by +43.50

Directional Bias Before Open

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

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 23 was a large red Bearish Engulfing with small shadows
    • Retracing from the upper bound of a broadening pattern
    • Stochastic (9,1, 3): %K is below %D; falling near 30
    • RSI (9) is near 40 and falling
  • Last week was down -41.57 or -1.4%; the 5-week ATR is 100.33
  • Last week’s pivot point=2873.72, R1=2912.47, R2=2997.83; S1=2808.36, S2=2769.61; No pivot levels were breached
  • A down week; fourth in a row and fourth in last five weeks and sixth 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
  • Below 10-week EMA; above 39-week SMA and 89-week SMA
  • Uptrend Under Pressure
Daily
  • A green candle that gapped up at the open; small upper and lower shadows
    • %K is above %D near 85
    • RSI-9 turning up and is above 50
  • Above 50-day EMA, 100-day SMA, 20-DAY EMA; above 200-day SMA;
  • Uptrend Under Pressure
2-Hour (e-mini future)
  • Rising from a low of 2810.25 at 6:00 PM on August 25 from the lower limit of a horizontal channel to the upper limit near 2944.00
    • RSI-21 is moving along 75 since 2:00 AM on August 29
    • %K is crisscrossing %D over 90
  • Above 20-bar EMA, which is above EMA10 of EMA50
  • Bias: Up
30-Minute (e-mini future)
  • Break above a horizontal channel between 2890.00 and 2855.00 continues; 161.8% extension target near 2946.00 is achieved
    • RSI-21 is mostly above 50 since 9:30 AM on August 28; above 65
    • %K is crisscrossing %D lower from above 90; near 80
    • Above 20-bar EMA, which is above EMA10 of EMA50
  • Bias: Up
15-Minute (e-mini future)
  • Bollinger Band (20, 2.0) is moving up since 3:00 AM on August 29
  • The Bollinger Band was relatively narrow till 3:30 AM expanding since with price walking up the upper band
  • Stochastic (9, 1, 3): %K is crossing below %D near 60; Bearish Divergence
  • Bias: Up

Previous Session

Major U.S. indices closed higher on Thursday, August 29 in mixed volume. Dow Jones Industrial Average and NASDAQ Composite traded in higher volume. Major indices gapped up at the open and did not close the gap.

From Briefing.com:

Each of the major U.S. indices rose more than 1.0% on Thursday, lifted by China indicating it wants to prevent trade tensions from further escalating. The S&P 500 (+1.3%) and Dow Jones Industrial Average (+1.3%) both increased 1.3%. The Nasdaq Composite (+1.5%) and Russell 2000 (+1.6%) pulled out ahead.

[…]

Ten of the 11 S&P 500 sectors finished in positive territory. The industrials (+1.8%) and information technology (+1.7%) sectors outperformed amid solid gains in the trade-sensitive transportation and semiconductor spaces. The Dow Jones Transportation Average increased 2.0%, and the Philadelphia Semiconductor Index increased 2.3%. The consumer staples sector (unch) was unchanged.

[…]

• The second estimate for Q2 GDP showed a downward revision to 2.0% annualized growth (Briefing.com consensus 2.0%) from 2.1% annualized growth reported in the advance estimate. The GDP Deflator was unrevised at 2.4%, as expected.
o The key takeaway from the report is that consumer spending growth was revised up to 4.7% from 4.3%, which was the strongest growth since the fourth quarter of 2014. Granted it’s a backward-looking data point, yet it offers a nice reminder that the U.S. consumer, supported by a tight labor market, has remained in good shape.
• Initial claims for the week ending August 24 increased by 4,000 to 215,000, as expected. Continuing claims for the week ending August 17 increased by 22,000 to 1.698 million.
o The key takeaway from the report is that initial claims, which are an important leading indicator, remain low. That will perpetuate the belief that there remains a good underpinning in a tight labor market for continued consumer spending growth.
• The Advance report for International Trade in Goods for July showed a deficit of $72.3 billion following an unrevised deficit of $74.2 billion. Meanwhile, the Advance report for Wholesale Inventories for July increased 0.2%, and the Advance report for Retail Inventories for July increased 0.8%.
• Pending Home Sales declined 2.5% in July (Briefing.com consensus +0.1%). Today’s reading follows an unrevised increase of 2.8% in June.

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