Market Remarks

Morning Notes – Tuesday October 22, 2019

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are higher;
  • The odds are for a sideways to up day – watch for break above 3014.25 and break below 3000.75 for clarity
  • Key economic data due:
    • Existing Home Sales (5.45M est.; prev. 5.49M) at 10:10 AM
    • Richmond Manufacturing Index (-7 est.; prev. -9) at 10;00 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 3000.14,  2996.48 and 2986.39
  • Critical resistance levels for S&P 500 are 3008.29, 3016.37 and 3021.99
  • Key levels for eMini futures: break above 3014.25, the high of 9:00 PM and break below 3005.25, the low of 6:30 AM

Pre-Open

  • On Monday, at 4:00 PM, S&P future closed at 3005.75 and the index closed at 3006.72 – a spread of about +1.00 points; futures closed at 3005.50 for the day; the fair value is -0.75
  • Pre-NYSE session open, futures are higher – at 9:00 AM, S&P 500 futures were up by +4.75; Dow by +18 and NASDAQ by +24.25

Markets Around The World

  • Markets in the East closed mostly higher – Mumbai was lower; Tokyo was closed for trading
  • European markets are mixed – Germany, U.K. and STOXX 600 are up; France, Spain, Italy and Switzerland are down
  • Currencies:
    Up Down
    • Dollar index
    • USD/CHF
    • NZD/USD
    • USD/CAD
    • INR/USD
    • EUR/USD
    • GBP/USD
    • USD/JPY
    • AUD/USD
  • Commodities:
    Up Down
    • Crude Oil
    • NatGas
    • Gold
    • Platinum
    • Palladium
    • Coffee
    • Cotton
    • Silver
    • Copper
    • Sugar
    • Cocoa
  • Bonds
    • 10-yrs yield is at 1.766%, down from October 21 close of 1.792%;
    • 30-years is at 2.254%, down from 2.284%
    • 2-years yield is at 1.599%, down from 1.619%
    • The 10-Year-&-2-Year spread is at 0.167 down from 0.173
  • VIX
    • Is at 14.01 up from October 21 close of 14.00; above 5-day SMA 13.946
    • 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 green candle with almost no upper and lower shadows; three-day evening star pattern is nullified
    • %K is crossing above %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; trying to break above a congestion around 3000.00
    • RSI-21 declined from above 70 on Monday to just below 60
    • %K is crisscrossing %D lower since 4:00 PM on Monday
  • 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; moving up since 12:00 PM on Friday from 2975.00
    • RSI-21 declined from above 65 on Monday to 50
    • %K is above since 4:00 PM
    • At/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 7:30 AM after moving down since 2:15 AM;
  • The Bollinger Band was relatively narrow from 1:00 AM to 2:30 AM; price walked down the lower band till 7:30 AM and then bounced up to the upper band
  • Stochastic (9, 1, 3): %K is crisscrossing %D above 80
  • Bias: Up

Previous Session

Major U.S. indices closed higher on Monday, October 21 in mostly lower volume. Russell 2000 traded in lower volume. The indices opened to the upside and then for most of the drifted higher.

From Briefing.com:

The stock market closed near session highs on Monday, with the S&P 500 (+0.7%), Nasdaq Composite (+0.9%), and Russell 2000 (+1.0%) posting solid gains as investor sentiment remained relatively upbeat. The Dow Jones Industrial Average (+0.2%) struggled to keep pace, predominately due to continued weakness in Boeing (BA 331.06, -12.94, -3.8%).

[…]

The 2-yr yield increased two basis points to 1.59%, and the 10-yr yield increased five basis points to 1.79%. The U.S. Dollar Index was little changed at 97.32.

[…]

Investors did not receive any economic data of note on Monday, but will receive Existing Home Sales for September on Tuesday.

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