Market Remarks

Morning Notes – Thursday November 14, 2019

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are essentially moving sideways for the past few days
  • The odds are for a sideways to down day; watch for break above 3095.75 and below 3075.75 for clarity
  • Key economic data due:
    • PPI (0.4% vs. 0.3% est.; prev. -0.3%) at 8:30 AM
    • Core CPI (0.3% vs. 0.2% est.; prev. -0.3%) at 8:30 AM
    • Unemployment Claims (225K vs. 215K est.; prev. 211K) at 8:30 AM
    • Fed Chair Powell Testimony to Congress

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 3087.27, 3078.80 and 3073.58
  • Critical resistance levels for S&P 500 are 3098.06, 3102.61 and 3109.56
  • Key levels for eMini futures: break above 3095.75, the high of 8:30 PM and break below 3085.50, the low of 2:00 PM on November 13

Pre-Open

  • On Wednesday, at 4:00 PM, S&P future closed at 3092.50 and the index closed at 3094.04 – a spread of about -1.50 points; futures closed at 3095.50 for the day; the fair value is -3.00
  • Pre-NYSE session open, futures are lower – at 8:30 AM, S&P 500 futures were down by -5.00; Dow by -44 and NASDAQ by -16.00

Markets Around The World

  • Markets in the East closed mixed – Shanghai, Sydney, Mumbai and Seoul closed higher; Hong Kong, Tokyo and Singapore closed lower
  • European markets are mostly lower – Italy is up
  • Currencies:
    Up Down
    • Dollar index
    • USD/CAD
    • EUR/USD
    • GBP/USD
    • USD/JPY
    • USD/CHF
    • AUD/USD
    • NZD/USD
    • INR/USD
  • Commodities:
    Up Down
    • Crude Oil
    • NatGas
    • Gold
    • Silver
    • Copper
    • Palladium
    • Platinum
    • Coffee
    • Cocoa
    • Sugar
    • Cotton
  • Bonds
    • 10-yrs yield closed at 1.870%, down from November 12 close of 1.909%;
    • 30-years is at 2.351%, down from 2.384%
    • 2-years yield is at 1.634%, down from 1.658%
    • The 10-Year-&-2-Year spread is at 0.236 down from 0.251
  • VIX
    • Is at 13.33 up from November 13 close of 13.00; above 5-day SMA
    • Recent high was 13.95 on October 31; recent low was 12.07 on November 8

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

Monthly
  • Uptrend resumed
  • September was a green candle with small upper shadow and lower shadow longer than the real body
    • Stochastic %K is above %D and above 90
    • RSI-9 is breaking above a downtrend line from January 2018 high;
    • Rising to the upper band from 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 November 8 was a green candle with almost small upper shadow and longer lower shadow
    • Breaking above the upper bound of a broadening pattern
    • Stochastic (9,1, 3): %K is above %D; above 90;
    • RSI (9) is above 70
  • Last week was up +26.17 or +0.9%; the 5-week ATR is 52.69
  • Last week’s pivot point=3085.58, R1=3105.27, R2=3117.46; S1=3073.39, S2=3053.70; R1/R2 pivot levels were breached
  • An up week; Fifth in last five weeks and eight 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 small bullish engulfing candle over a doji candle with small lower and upper shadows
    • %K is crisscrossing %D above 80
    • RSI-9 is below 8-day SMA
  • Broke above a symmetrical triangle, that resembles an ascending triangle, on October 25;
    • Upper bound 3027.98 and lower bound 2898.07; max height almost 130; break point is 3016.00; the 61.8% extension target near 3096.00 is achieved; the 100% extension target is near 3146.00;
  • Above 20-day EMA, 50-day EMA, 100-day SMA and 200-day SMA;
  • Uptrend
2-Hour (e-mini future)
  • Drifting mostly sideways to up since 8:00 AM on November 4 within a 30 point band; uptrend since October 9
    • RSI-21 is moving around 50
    • %K is below %D since 6:00 PM on Wednesday
  • At/above 20-bar EMA, which is above EMA10 of EMA50
  • Bias: Up-Side
30-Minute (e-mini future)
  • Moving sideways since 2:30 AM on November 7 between 3097.00 and 3072.50
    • RSI-21 moving near 50
    • %K is crisscrossing %D below 50
    • At/below 20-bar EMA, which is at/below EMA10 of EMA50
  • Bias: Side
15-Minute (e-mini future)
  • Bollinger Band (20, 2.0) is drifting sideways to down since 2:30 PM on November 13
  • The Bollinger Band is relatively narrow
  • Stochastic (9, 1, 3): %K is crisscrossing %D below 50
  • Bias: Side

Previous Session

Major U.S. indices closed mixed on Wednesday, November 13 in higher volume. Dow Jones Industrial Average, S&P 500 and Wilshire 5000 Total Market Index closed higher. The day’s price range was small. Indices opened down and made days low in early trading and then mostly traded higher for rest of the day.

From Briefing.com:

The S&P 500 (+0.1%) and Dow Jones Industrial Average (+0.3%) closed at record highs on Wednesday, even as trade reports revealed that the U.S. and China continue to waver on familiar issues. Walt Disney (DIS 148.72, +10.14, +7.3%) deserves some credit, with shares rising more than 7% after it said 10 million users have already signed up for Disney+.

The Nasdaq Composite (-0.1%) and Russell 2000 (-0.4%) finished slightly lower.

[…]

U.S. Treasuries finished the session higher as part of the defensive trade today. The 2-yr yield declined two basis points to 1.63%, and the 10-yr yield declined four basis points to 1.87%. The U.S. Dollar Index finished little changed at 98.33. WTI crude increased 0.4% (+$0.23) to $57.08/bbl.

[…]

• Total CPI was up 0.4% m/m in October (Briefing.com consensus +0.3%), driven largely by higher energy costs, while core CPI, which excludes food and energy, increased 0.2%, as expected. The monthly changes left the yr/yr changes at 1.8% for total CPI (up from 1.7% previously) and 2.3% for core CPI (down from 2.4% previously).
o The key takeaway from the report is that consumer inflation is firming up, but it isn’t turning up yet to an actionable, rate-hike degree for the Federal Reserve.
• The weekly Mortgage Applications Index jumped 9.6% following a 0.1% decline in the prior week.
• The Treasury Budget for October showed a deficit of $134.5 billion versus a deficit of $100.5 billion in the same period a year ago.
o October marks the start of fiscal year 2020 for the government. The budget deficit over the last 12 months is $1.018 trillion.

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