Morning Notes – Monday October 21, 2019

/ October 21, 2019

Directional Bias For The Day:

  • S&P Futures are higher;
  • The odds are for a sideways to up day – watch for break above 3001.25 and break below 2992.25 for clarity
  • No key economic data due:

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 2985.98, 2976.31 and 2962.94
  • Critical resistance levels for S&P 500 are 3002.57, 3008.29 and 3016.37
  • Key levels for eMini futures: break above 3001.25, the high of 7:30 AM on Friday and break below 2992.25, the low of 5:00 AM

Pre-Open

  • On Friday, at 4:00 PM, S&P future closed at 2985.00 and the index closed at 2986.20 – a spread of about +1.25 points; futures closed at 2988.25 for the day; the fair value is -3.25
  • Pre-NYSE session open, futures are higher – at 9:15 AM, S&P 500 futures were up by +12.75; Dow by +39 and NASDAQ by +37.25

Markets Around The World

  • Markets in the East closed higher – Mumbai was closed for trading
  • European markets are higher
  • Currencies:
    Up Down
    • GBP/USD
    • USD/JPY
    • USD/CHF
    • AUD/USD
    • NZD/USD
    • Dollar index
    • EUR/USD
    • USD/CAD
    • INR/USD
  • Commodities:
    Up Down
    • Gold
    • Silver
    • Copper
    • Platinum
    • Palladium
    • Coffee
    • Cocoa
    • Crude Oil
    • NatGas
    • Sugar
    • Cotton
  • Bonds
    • 10-yrs yield is at 1.784%, up from October 18 close of 1.747%;
    • 30-years is at 2.286%, up from 2.246%
    • 2-years yield is at 1.598%, up from 1.577%
    • The 10-Year-&-2-Year spread is at 0.186 up from 0.170
  • VIX
    • Is at 14.40 up from October 18 close of 14.25; above 5-day SMA 13.932
    • Recent high was 20.38 on October 8; recent low was 13.31 on October 17

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

Monthly
  • Under Pressure
  • September was a green candle with small lower shadow and longer upper shadow
    • Stochastic %K is forming a Bearish Divergence
    • RSI-9 is below a downtrend line from January 2018 high; forming a Bearish Divergence
    • Near the middle band of the 120-month regression channel
  • 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 October 18 was a green candle with almost no lower shadow and an upper shadow equal to the real body
    • Again approaching the upper bound of a broadening pattern
    • Stochastic (9,1, 3): %K is above %D;
    • RSI (9) has turned up and just above 50
  • Last week was up +15.93 or +0.5%; the 5-week ATR is 77.69 or 1.5%
  • Last week’s pivot point=2985.81, R1=3008.68, R2=3031.16; S1=2963.33, S2=2940.46; no pivot levels were breached
  • An up week; second in last five weeks and fifth in last ten weeks
  • Last swing low, 2728.81, was the low on June 3, 2018; last swing high was 3027.98, made during the week of July 22
  • Above 10-week EMA; above 39-week SMA and 89-week SMA
  • Uptrend
Daily
  • A red candle with small upper shadow and longer lower shadow; three-day evening star pattern
    • %K is crossing below %D from above 80
    • RSI-9 turning down and approaching the 8-day SMA from above
  • Above 20-day EMA, 50-day EMA, 100-day SMA and 200-day SMA;
  • Uptrend
2-Hour (e-mini future)
  • Moving mostly sideways since 10:00 AM on October 15 in a congestion around 3000.00
    • RSI-21 is rising since 2:00 PM on Friday from near 40; is above 40 since October 9
    • %K is crisscrossing %D higher
  • At/above 20-bar EMA, which is above EMA10 of EMA50
  • Bias: Side-Up
30-Minute (e-mini future)
  • Drifting sideways since 10:30 AM on October 15 between 2007.00 and 2987.00
    • RSI-21 between 40 and 65 since 6:00 AM on October 14
    • %K is crossing below %D from above 80
    • Above 20-bar EMA, which is above EMA10 of EMA50
  • Bias: Side
15-Minute (e-mini future)
  • Bollinger Band (20, 2.0) is moving sideways to up since 7:45 PM on Sunday
  • The Bollinger Band was relatively narrow till 8:00 AM; expanding since with price walking up the upper band
  • Stochastic (9, 1, 3): %K is crossing below %D above 80
  • Bias: Side-Up

Previous Session

Major U.S. indices closed mostly lower on Friday, October 18 in higher volume. Dow Jones Transportation Average closed higher.

For the week, major indices closed mostly higher in mixed volume. Dow Jones Industrial Average was lower during the week. DJIA and DTRAN traded in higher volume other in lower volume for the week.

From Briefing.com:

The stock market closed lower on this options expiration Friday, as investors leaned cautiously following negative corporate headlines and tepid Chinese data. The S&P 500 opened flat, lost as much as 0.7% intraday, and finished lower by 0.4% like the Russell 2000 (-0.4%).

[…]

U.S. Treasuries ended the session on a higher note. The 2-yr yield declined four basis points to 1.57%, and the 10-yr yield declined one basis point to 1.75%. The U.S. Dollar Index declined 0.4% to 97.27. WTI crude declined 0.2%, or $0.13, to $53.76/bbl.

[…]

• The Conference Board’s Leading Economic Index (LEI) declined 0.1% in September (Briefing.com consensus 0.0%) on the heels of a downwardly revised 0.2% decline (from 0.0%) in August.
o The key takeaway from the report is that it fits the narrative of a growth slowdown unfolding in the U.S. economy.

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