Market Remarks

Morning Notes – Thursday October 24, 2019

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are higher;
  • The odds are for a sideways to an up day – watch for break below 3003.00 for change of fortune
  • Key economic data due:
    • Durable Goods Orders (-1.1% vs. -0.5% est.; prev. 0.3%) at 8:30 AM
    • Core Durable Goods Orders (-0.3% vs. -0.2% est. ; prev. 0.3%) at 8:30 AM
    • Unemployment Claims (212K vs. 216K est.; prev. 218K) at 8:30 AM
    • Flash Manufacturing PMI (50.7 est. ; prev. 51.1) at 9:45 AM
    • Flash Services PMI (51.0 est.; prev. 50.9) at 9:45 AM
    • New Home Sales (710K est.; prev. 713K) at 10:00 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 2993.83, 2991.21 and 2986.39
  • Critical resistance levels for S&P 500 are 3014.57, 3021.99 and 3021.99
  • Key levels for eMini futures: break above 3012.25, the high of 3:00 AM and break below 3003.00, the low of 4:00 AM

Pre-Open

  • On Wednesday, at 4:00 PM, S&P future closed at 3003.50 and the index closed at 3004.52 – a spread of about -0.75 points; futures closed at 3005.75 for the day; the fair value is -2.25
  • Pre-NYSE session open, futures are higher – at 9:15 AM, S&P 500 futures were up by +5.75; Dow by up +46 and NASDAQ up by +45.75

Markets Around The World

  • Markets in the East closed mostly higher – Shanghai and Mumbai were down
  • European markets are higher
  • Currencies:
    Up Down
    • EUR/USD
    • INR/USD
    • Dollar index
    • GBP/USD
    • USD/JPY
    • USD/CHF
    • AUD/USD
    • NZD/USD
    • USD/CAD
  • Commodities:
    Up Down
    • Crude Oil
    • NatGas
    • Gold
    • Silver
    • Copper
    • Platinum
    • Palladium
    • Sugar
    • Coffee
    • Cotton
    • Cocoa
  • Bonds
    • 10-yrs yield is at 1.764%, up from October 23 close of 1.759%;
    • 30-years is at 2.254%, up from 2.251%
    • 2-years yield is at 1.563%, down from 1.575%
    • The 10-Year-&-2-Year spread is at 0.201 up from 0.184
  • VIX
    • Is at 13.85 down from October 23 close of 14.01; below 5-day SMA 14.114
    • 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 shadow and small lower shadow; near the upper bound of a symmetrical triangle
    • %K is below %D from above 80
    • RSI-9 is below 8-day SMA
  • Above 20-day EMA, 50-day EMA, 100-day SMA and 200-day SMA;
  • Uptrend
2-Hour (e-mini future)
  • Drifting up since 8:00 PM on October 22 after declining slightly from the upper bound of a sideways move since 10:00 AM on October 15; approaching the upper bound near 3014.00
    • RSI-21 bouncing from below 30 to just above 40
    • %K is crisscrossing %D above 80
  • Above 20-bar EMA, which is above EMA10 of EMA50
  • Bias: Side-Up
30-Minute (e-mini future)
  • Moving up since 8:00 PM on October 22
    • RSI-21 rising from near 30 to just above 60
    • %K is above since 4:30 AM
    • 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 0:30 AM on October 23
  • The Bollinger Band narrowed from 10:00 PM to 2:45 AM; expanding since with price walking up the upper bound
  • Stochastic (9, 1, 3): %K is crisscrossing %D above 80
  • Bias: Up

Previous Session

Major U.S. indices closed mostly higher on Wednesday, October 23 in lower volume. Dow Jones Transportation Average closed lower. The indices opened to the downside and then rose till midday then tested the days lows by 3:00 PM before turning around and closing near the high for the day..

From Briefing.com:

The S&P 500 increased 0.3% on Wednesday in a resilient session. Today featured disappointing quarterly results and guidance from Caterpillar (CAT 135.34, +1.65, +1.2%) and Texas Instruments (TXN 118.95, -9.62, -7.5%), but the broader market was able to withstand the news to close at session highs.

The Dow Jones Industrial Average increased 0.2%, the Nasdaq Composite increased 0.2%, and the Russell 2000 increased 0.1%.

[…]

U.S. Treasuries saw an uptick in demand, which pushed yields lower. The 2-yr yield declined three basis points to 1.58%, and the 10-yr yield declined one basis point to 1.76%. The U.S. Dollar Index declined 0.1% to 97.46.

[…]

• The MBA Mortgage Applications Index for the week ending October 19 was down 11.9%, as higher mortgage rates pressured interest in refinancing and purchase applications.
• The FHFA Housing Price Index for August increased 0.2% following an unrevised 0.4% increase in July.
Looking ahead, investors will receive New Home Sales for September, Durable Goods Orders for September, and the weekly Initial and Continuing Claims report on Thursday.

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