Market Remarks

Morning Notes – Wednesday November 20, 2019

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are lower; declining since 6:00 AM on November 19
  • The odds are for a down to sideways day; watch for break above 3124.25 for change of fortune
  • Key economic data due:
    • FOMC Meeting Minutes at 2:00 PM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 3112.06, 3104.60 and 3098.20
  • Critical resistance levels for S&P 500 are 3119.59, 3125.16 and 3127.64
  • Key levels for eMini futures: break above 3116.00, the high of 2:00 AM and break below 3104.50, the low of 6:00 AM

Pre-Open

  • On Tuesday, at 4:00 PM, S&P future closed at 3119.50 and the index closed at 3120.18 – a spread of about -0.75 points; futures closed at 3118.50 for the day; the fair value is +1.00
  • Pre-NYSE session open, futures are lower – at 8:30 AM, S&P 500 futures were down by -7.00; Dow by -72 and NASDAQ by -25.50

Markets Around The World

  • Markets in the East closed mostly lower – Mumbai closed up;
  • European markets are mostly lower – Italy and Switzerland are up
  • Currencies:
    Up Down
    • Dollar index
    • USD/CHF
    • USD/CAD
    • EUR/USD
    • GBP/USD
    • USD/JPY
    • AUD/USD
    • NZD/USD
    • INR/USD
  • Commodities:
    Up Down
    • Crude Oil
    • NatGas
    • Platinum
    • Sugar
    • Coffee
    • Cotton
    • Gold
    • Silver
    • Copper
    • Palladium
    • Cocoa
  • Bonds
    • 10-yrs yield closed at 1.786%, down from November 18 close of 1.808%;
    • 30-years is at 2.255%, down from 2.293%
    • 2-years yield is at 1.590%, down from 1.606%
    • The 10-Year-&-2-Year spread is at 0.196 down from 0.202
  • VIX
    • Is at 13.32 up from November 19 close of 12.86; above 5-day SMA
    • Recent high was 13.95 on October 31; recent low was 11.92 on November 15

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 15 was a green candle with almost no upper and lower shadows
    • 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 +27.38 or +0.9%; the 5-week ATR is 41.49
  • Last week’s pivot point=3105.58, R1=3135.34, R2=3150.22; S1=3090.70, S2=3060.94; R1/R2 pivot levels were breached
  • An up week; fifth in last five weeks and seventh 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 red candle that opened at the new high and then declined for most of the day; almost no upper shadow and small lower shadow
    • %K is crisscrossing %D above 80
    • RSI-9 is above 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 down since 6:00 AM on Tuesday from a high of 3132.50 to below 3110.00 by 8:00 AM on Wednesday; uptrend since October 9
    • RSI-21 declined to below 40 from above 70
    • %K is below 30 but above %D
  • Below EMA10 of EMA50, which is below 20-bar EMA
  • Bias: Up-Side
30-Minute (e-mini future)
  • Moving down since 6:00 AM on November 19
    • RSI-21 moving around 40 since 10:30 AM on November 19
    • %K is above %D since 6:00 AM
    • Below  20-bar EMA, which is below EMA10 of EMA50
  • Bias: Side-Down
15-Minute (e-mini future)
  • Bollinger Band (20, 2.0) is mostly drifting down since 11:00 AM on Tuesday
  • The Bollinger Band was relatively narrow from 11:15 PM to 2:45 AM; expanding since with price first walking down to the lower band and then bouncing up to the upper band
  • Stochastic (9, 1, 3): %K is above %D since 8:00 AM
  • Bias: Side-Down

Previous Session

Major U.S. indices closed mixed  on Tuesday, November 19 in mostly higher volume. NASDAQ Composite, Russell 2000 and  Wilshire 5000 Total Market Index closed up and NASDAQ Composite traded in lower volume. The day’s range was small and most indices made indecisive patterns. Dow Jones Industrial Average made bearish engulfing pattern.

From Briefing.com:

The S&P 500 declined 0.1% on Tuesday in a mixed session. The retail industry was under pressure following disappointing quarterly results and guidance from Home Depot (HD 225.86, -12.99, -5.4%) and Kohl’s (KSS 47.02, -11.38, -19.5%).

The Dow Jones Industrial Average (-0.4%) also finished lower, while the Nasdaq Composite (+0.2%) and Russell 2000 (+0.4%) finished higher. The Nasdaq closed at another record high.

[…]

The U.S. Treasury market was relatively quiet, but demand for longer-dated bonds contributed to some curve-flattening activity. The 2-yr yield was unchanged at 1.59%, and the 10-yr yield declined two basis points to 1.79%. The U.S. Dollar Index increased 0.1% to 97.85.

[…]

• Total housing starts increased 3.8% m/m to a seasonally adjusted annual rate of 1.314 million (Briefing.com consensus 1.300 million) while total building permits increased 5.0% m/m to a seasonally adjusted annual rate of 1.461 million (Briefing.com consensus 1.365 million).
o There was a sizable jump in starts (+8.6%) and permits (+8.2%) for multi-unit dwellings, yet the key takeaway from the report is that starts (+2.0%) and permits (+3.2%) increased for single-family units in an inventory-constrained environment for single-family homes.

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