Market Remarks

Morning Notes – Friday November 15, 2019

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are essentially moving sideways for the past few days; broke above the range at 6:00 PM on Thursday
  • The odds are for an up day but mostly likely sideways from pre-open levels; watch for break below 3095.75 for change of fortune
  • Key economic data due:
    • Retail Sales ( 0.1% est.; prev. -0.3%) at 8:30 AM
    • Core Retail Sales ( 0.3% est.; prev. -0.1%) at 8:30 AM
    • Empire State Manufacturing Index ( 6.1 est.; prev. 4.0) at 8:30 AM
    • Industrial Production ( -0.4% est. ; prev. -0.4%) at 9:15 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 3085.31, 3082.26 and 3078.80
  • Critical resistance levels for S&P 500 are 3102.61, 3107.64 and 3117.07
  • Key levels for eMini futures: break above 3111.50, the high of 9:30 PM and break below 3095.75, the low of 6:00 PM on November 13

Pre-Open

  • On Thursday, at 4:00 PM, S&P future closed at 3096.25 and the index closed at 3096.63 – a spread of about -0.50 points; futures closed at 3097.00 for the day; the fair value is -3.00
  • Pre-NYSE session open, futures are higher – at 7:15 AM, S&P 500 futures were up by +7.75; Dow by +78 and NASDAQ by +30.75

Markets Around The World

  • Markets in the East closed mostly higher – Shanghai was down
  • European markets are mostly higher – U.K. and STOXX 600 are down
  • Currencies:
    Up Down
    • EUR/USD
    • USD/JPY
    • USD/CHF
    • AUD/USD
    • NZD/USD
    • Dollar index
    • GBP/USD
    • USD/CAD
    • INR/USD
  • Commodities:
    Up Down
    • Copper
    • Cotton
    • Crude Oil
    • NatGas
    • Gold
    • Silver
    • Palladium
    • Platinum
    • Sugar
    • Coffee
    • Cocoa
  • Bonds
    • 10-yrs yield closed at 1.815%, down from November 13 close of 1.870%;
    • 30-years is at 2.297%, down from 2.351%
    • 2-years yield is at 1.597%, down from 1.634%
    • The 10-Year-&-2-Year spread is at 0.218 down from 0.236
  • VIX
    • Is at 12.93 down from November 14 close of 13.05; 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 green candle with small lower and smaller 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; breaking above the range sine 6:00 PM on November 14; uptrend since October 9
    • RSI-21 is moving above 60
    • %K is below %D since 6:00 PM on Thursday
  • Above 20-bar EMA, which is above EMA10 of EMA50
  • Bias: Up-Side
30-Minute (e-mini future)
  • Moving sideways to up since 2:30 AM on November 7 between 3097.00 and 3072.50; broke above range at 7:00 PM on Thursday
    • RSI-21 moving above 50 since 2:00 PM on Thursday
    • %K is above %D since 6:30 AM
    • At/above 20-bar EMA, which is above EMA10 of EMA50
  • Bias: Side-Up
15-Minute (e-mini future)
  • Bollinger Band (20, 2.0) is drifting sideways to down since 12:00 AM after expanding since 3:15 PM
  • The Bollinger Band is relatively narrow since 12:00 AM
  • Stochastic (9, 1, 3): %K is above %D since 6:00 AM
  • Bias: Up-Side

Previous Session

Major U.S. indices closed mixed on Thursday, November 14 in mixed volume. Dow Jones Industrial Average, NASDAQ Composite and Russell 2000 closed down. DJIA and NASDAQ traded in higher volume. The day’s price range was small and indecisive. The indices rose near day’s end.

From Briefing.com:

The S&P 500 (+0.1%) eked out another record close on Thursday despite Cisco Systems (CSCO 44.91, -3.55, -7.3%) dropping more than 7% after it issued downside quarterly guidance. The Dow Jones Industrial Average (unch), Nasdaq Composite (unch), and Russell 2000 (unch) finished closer to their flat lines.

[…]

The turnaround in Walmart shares coincided with a measly 0.4% decline in the S&P 500 before the benchmark index mustered its way back into positive territory by late afternoon. The real estate sector (+0.8%) led the comeback effort amid another decline in Treasury yields, while the energy sector (-0.3%) fell behind amid lower oil prices ($56.76, -0.32, -0.6%).

The 2-yr yield declined five basis points to 1.58%, and the 10-yr yield declined six basis points to 1.82%. The U.S. Dollar Index declined 0.2% to 98.17.

[…]

• The Producer Price Index for final demand jumped 0.4% m/m in October (Briefing.com consensus +0.3%) while the index for final demand, less food and energy, rose 0.3% (Briefing.com consensus +0.2%). The yr/yr change for these measures checked in at 1.1% and 1.6%, respectively, versus 1.4% and 2.0% in September.
o The key takeaway from the report is that its surprise potential was mitigated by the prior release of the CPI data; moreover, the monthly headline surprise was neutralized by the year-over-year deceleration seen in the changes for total PPI and core PPI.
• Initial claims increased by 14,000 to 225,000 (Briefing.com consensus 214,000) for the week ending November 9. Continuing claims for the week ending November 2 decreased by 10,000 to 1.683 million.
o The key takeaway from the report is the recognition that the variance in the weekly initial claims number wasn’t enough to change the otherwise supportive trend in the four-week moving average in a material way.

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