Market Remarks

Morning Notes – Friday November 22, 2019

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are higher; rising since 10:30 AM on Thursday
  • The odds are for an up to sideways day; watch for break below 3098.25 for change of fortune
  • Key economic data due:
    • Flash Manufacturing PMI ( 51.5 est.; prev. 51.3) at 9:45 AM
    • Flash Services PMI ( 51.2 est. ; prev. 50.6) at 9:45 AM
    • Revised UoM Consumer Sentiment ( 95.8 est. ; prev. 95.7 ) at 10:00 AM
    • Revised UoM Inflation Expectations (prev. 2.5%) at 10:00 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 3099.45, 3094.55 and 3091.41
  • Critical resistance levels for S&P 500 are 3109.78, 3118.97 and 3125.16
  • Key levels for eMini futures: break above 3114.50, the high of 3:30 AM and break below 3100.50, the low of 7:00 PM

Pre-Open

  • On Thursday, at 4:00 PM, S&P future closed at 3102.75 and the index closed at 3103.54 – a spread of about -0.75 points; futures closed at 3104.00 for the day; the fair value is -1.25
  • Pre-NYSE session open, futures are higher – at 8:15 AM, S&P 500 futures were up by +4.25; Dow by +38 and NASDAQ by +14.50

Markets Around The World

  • Markets in the East closed mostly higher – Shanghai and Mumbai closed lower;
  • European markets are higher
  • Currencies:
    Up Down
    • Dollar index
    • EUR/USD
    • USD/CHF
    • AUD/USD
    • NZD/USD
    • GBP/USD
    • USD/JPY
    • USD/CAD
    • INR/USD
  • Commodities:
    Up Down
    • NatGas
    • Gold
    • Silver
    • Copper
    • Palladium
    • Sugar
    • Cotton
    • Crude Oil
    • Platinum
    • Coffee
    • Cocoa
  • Bonds
    • 10-yrs yield closed at 1.772%, up from November 20 close of 1.738%;
    • 30-years is at 2.231%, up from 2.203%
    • 2-years yield is at 1.611%, up from 1.577%
    • The 10-Year-&-2-Year spread is at 0.161 unchanged
  • VIX
    • Is at 12.87 down from November 21 close of 13.13; 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 real candle with small upper shadow and long lower shadow; the entire candle is mostly within the lower shadow of previous day
    • %K is below %D and nearing 50
    • 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 sideways since 12:00 PM on November 20 after declining from all time high of 3132.50; uptrend since October 9
    • RSI-21 bouncing from near 30 to near 50
    • %K is crisscrossing %D higher
  • At/below 20-bar EMA, which is at/below EMA10 of EMA50
  • Bias: Up-Side
30-Minute (e-mini future)
  • Moving sideways to up since 1:00 PM on November 20;
    • RSI-21 moving just above 50 since 7:00 PM
    • %K is above %D since 6:30 AM
    • At/above EMA10 of EMA50, which is at/above 20-bar EMA
  • Bias: Side-Down-Side
15-Minute (e-mini future)
  • Bollinger Band (20, 2.0) is mostly drifting sideways since 11:00 PM on November 20
  • The Bollinger Band was relatively narrow from 12:00 AM to 3:00 AM; expanding since
  • Stochastic (9, 1, 3): %K is above %D since 6:15 AM
  • Bias: Side

Previous Session

Major U.S. indices closed lower on Thursday, November 21 in lower volume. Indices opened lower made day’s low in first few hours of trading. Then they rose till the final hour of trading before declining.

From Briefing.com:

The S&P 500 lost 0.2% on Thursday for its third straight decline amid some trade-headline exhaustion. The Dow Jones Industrial Average (-0.2%) and Nasdaq Composite (-0.2%) performed in-line with the benchmark index, while the Russell 2000 (-0.5%) underperformed.

[…]

With the market still trading near all-time highs, then, it appeared to be an opportune time to comfortably take some profits. Eight of the 11 S&P 500 sectors finished lower, with the real estate sector (-1.4%) declining the most. The Philadelphia Semiconductor Index pulled back 1.1% after UBS downgraded a trio of semiconductor-equipment companies to Sell.

The energy sector (+1.6%) was today’s outright leader, as oil prices ($56.58, +1.67, +2.9%) reacted positively to a Reuters report indicating that OPEC+ is likely to extend production cuts until June 2020.

[…]

The recent advance in the Treasury market was halted, sending yields higher across the curve. The 2-yr yield increased four basis points to 1.61%, and the 10-yr yield increased three basis points to 1.77%. The U.S. Dollar Index was little changed at 97.98.

[…]

• Initial claims for the week ending November 16 were unchanged at 227,000 (Briefing.com consensus 216,000). Continuing claims for the week ending November 9 were up 3,000 to 1.695 million.
o The key takeaway from the report is that initial claims have been more elevated than usual in recent weeks, suggesting perhaps that they have reached their cyclical bottom. Even so, they remain at relatively low levels indicative of an otherwise solid labor market.
• Existing home sales increased 1.9% month-over-month in October to a seasonally-adjusted annual rate of 5.46 million (Briefing.com consensus 5.50 mln) from a downwardly revised 5.36 million (from 5.38 million) in September. Total sales were 4.6% 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 the inventory of unsold homes continues to decline while mortgage rates, and unemployment rates, remain low.
• The Conference Board’s Leading Economic Index (LEI) declined 0.1% in October, in-line with the Briefing.com consensus estimate. The reading for September was revised down to -0.2% (from -0.1%). The October reading was the third straight monthly decline in the Leading Economic Index.
o The key takeaway from the report is that the third straight monthly decline left the LEI’s six-month growth (-0.1%) in slightly negative territory, which is the first foray into negative territory since May 2016.
• The Philadelphia Fed Index for November increased to 10.4 (Briefing.com consensus 5.5) from the 5.6 in October.

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