Market Remarks

Morning Notes – Wednesday October 23, 2019

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are lower to sideways;
  • The odds are for a sideways to down day – watch for break above 2997.75 for change of fortune
  • No key economic data due:

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 2995.04, 2986.39 and2976.31
  • Critical resistance levels for S&P 500 are 3005.35, 3014.57 and 3021.99
  • Key levels for eMini futures: break above 2997.50, the high of 6:00 AM and break below 2983.75, the low of 7:30 AM

Pre-Open

  • On Tuesday, at 4:00 PM, S&P future closed at 2995.25 and the index closed at 2995.99 – a spread of about -0.75 points; futures closed at 2994.50 for the day; the fair value is +0.75
  • Pre-NYSE session open, futures are mixed – at 9:15 AM, S&P 500 futures were down by -0.75; Dow by up +10 and NASDAQ up by +0.25

Markets Around The World

  • Markets in the East closed mixed – Shanghai, Hong Kong, Seoul and Singapore closed lower; Tokyo, Sydney and Mumbai were up
  • European markets are mixed – Germany, U.K. and Switzerland are up; France, Spain, Italy and STOXX 600 are down
  • Currencies:
    Up Down
    • Dollar index
    • GBP/USD
    • USD/JPY
    • USD/CHF
    • NZD/USD
    • USD/CAD
    • INR/USD
    • EUR/USD
    • AUD/USD
  • Commodities:
    Up Down
    • NatGas
    • Gold
    • Silver
    • Copper
    • Platinum
    • Crude Oil
    • Palladium
    • Sugar
    • Coffee
    • Cotton
    • Cocoa
  • Bonds
    • 10-yrs yield is at 1.720%, down from October 22 close of 1.768%;
    • 30-years is at 2.230%, down from 2.251%
    • 2-years yield is at 1.575%, down from 1.596%
    • The 10-Year-&-2-Year spread is at 0.167 down from 0.172
  • VIX
    • Is at 14.58 up from October 22 close of 14.46; above 5-day SMA 14.216
    • 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 almost no upper and lower shadows; retracing down from the upper bound of a symmetrical triangle
    • %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)
  • Drifting sideways to up since 8:00 PM on Tuesday after declining slightly from the upper bound of a sideways move since 10:00 AM on October 15
    • RSI-21 bouncing from below 30 to just above 40
    • %K is crisscrossing %D higher since 8:00 PM on Tuesday
  • At/below 20-bar EMA, which is at/below EMA10 of EMA50
  • Bias: Side
30-Minute (e-mini future)
  • Drifting sideways to up since 8:00 PM on Tuesday after a decline earlier in the day
    • RSI-21 moving between 30 and 50 since 8:00 PM
    • %K is above since 7:30 AM
    • At/above 20-bar EMA, which is below EMA10 of EMA50
  • Bias: Side-Down
15-Minute (e-mini future)
  • Bollinger Band (20, 2.0) is moving up since 0:30 AM
  • The Bollinger Band is of relatively stable width since 0:30 AM
  • Stochastic (9, 1, 3): %K is above %D since 7:30 AM
  • Bias: Down-Side

Previous Session

Major U.S. indices closed mixed on Monday, October 22 in mostly higher volume. Russell 2000 and NASDAQ Composite closed up. Russell 2000 traded in lower volume. The indices opened to the upside and then rose till mid-day before turning around and closing near the lows for the day.

From Briefing.com:

The S&P 500 lost 0.4% on Tuesday in a news-heavy session. Company-specific news contributed to outsized stock moves, but overall gains in broader market had been nominal until a hiccup on the Brexit front dragged the major indices into negative territory. The benchmark index closed at session lows below the 3000 level.

[…]

U.S. Treasuries finished the session mixed. The 2-yr yield increased two basis points to 1.61%, and the 10-yr yield declined two basis points to 1.77%. The U.S. Dollar Index increased 0.2% to 97.47.

[…]

• Existing home sales decreased 2.2% month-over-month in September to a seasonally-adjusted annual rate of 5.38 million (Briefing.com consensus 5.52 mln) from a revised 5.50 million (from 5.49 million) in August. Total sales were 3.9% higher than the same period a year ago.
o The key takeaway from the report is that upward pressure on prices is likely to persist as inventory of unsold homes continues decreasing from last year’s levels.

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