Market Remarks

Morning Notes – Friday December 6, 2019

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are higher; rising since 9:30 AM on December 3
  • The odds are for an up day; watch for break below 3121.25 for change of fortune
  • Key economic data due:
    • Non-Farm Employment Change ( 266K vs. 181K; prev. 128K ) at 8:30 AM
    • Unemployment Rate ( 3.5% vs. 3.6% est; prev. 3.6%) at 8:30 AM
    • Average Hourly Earnings ( 0.2% vs. 0.3% est.; prev. 0.2%) at 8:30 AM
    • Prelim UoM Consumer Sentiment ( 97.0 est. ; prev. 96.8 ) at 10:00 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 3119.38, 3109.74 and 3103.76
  • Critical resistance levels for S&P 500 are 3144..31, 3150.18 and 3154.26
  • Key levels for eMini futures: break above 3139.50, the low of 12:30 PM on November 29 and break below 3121.25, the low of 8:30 AM

Pre-Open

  • On Thursday, at 4:00 PM, S&P future closed at 3118.00 and the index closed at 3117.43 – a spread of about +0.50 points; futures closed at 3117.75 for the day; the fair value is +0.25
  • Pre-NYSE session open, futures are higher – at 8:30 AM, S&P 500 futures were up by +15.50; Dow by +159 and NASDAQ by +52.75

Markets Around The World

  • Markets in the East closed mostly higher – Mumbai closed lower;
  • European markets are higher
  • Currencies:
    Up Down
    • Dollar index
    • USD/CHF
    • AUD/USD
    • NZD/USD
    • USD/CAD
    • INR/USD
    • EUR/USD
    • GBP/USD
    • USD/JPY
  • Commodities:
    Up Down
    • Copper
    • Platinum
    • Sugar
    • Coffee
    • Cotton
    • Crude Oil
    • NatGas
    • Gold
    • Silver
    • Palladium
    • Cocoa
  • Bonds
    • 10-yrs yield closed at 1.797%, up from December 4 close of 1.781%;
    • 30-years is at 2.239%, up from 2.229%
    • 2-years yield is at 1.584%, up from 1.572%
    • The 10-Year-&-2-Year spread is at 0.209 unchanged
  • VIX
    • Is at 14.34 down from December 5 close of 14.52; below 5-day SMA
    • Recent high was 17.99 on December 3; recent low was 11.42 on November 26

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

Monthly
  • Uptrend resumed
  • October was a relatively large green candle with almost not lower shadow and small upper shadow
    • 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
Weekly:
  • The week ending on November 29 was a green candle with almost no lower shadow and small upper shadow; all time highs
    • Continuing the break above the upper bound of a broadening pattern
    • Stochastic (9,1, 3): %K crossed below %D; above 90;
    • RSI (9) is above 70
  • Last week was up +30.69 or +1.0%; the 5-week ATR is 40.22
  • Last week’s pivot point=3137.56, R1=3157.68, R2=3174.38; S1=3120.86, S2=3100.74; R1/R2 pivot levels were breached
  • An up week; fourth 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 green doji candle like a gravestone doji
    • %K is above %D near 50
    • RSI-9 is above 50 but 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 100% extension target near 3146.00 is achieved; the 161.8% extension target is near 3226.00
  • Above 20-day EMA, 50-day EMA, 100-day SMA and 200-day SMA;
  • Uptrend
2-Hour (e-mini future)
  • Moving higher since 8:00 AM on December 3 after declining to 3069.50 from all time high of 3158.00 on December 3
    • RSI-21 moving above 60
    • %K is below %D around 70
  • Above 20-bar EMA, which is above EMA10 of EMA50
  • Bias: Up
30-Minute (e-mini future)
  • Moving sideways to up since 10:00 AM on December 4;
    • RSI-21 moving above 50
    • %K is below %D since 7:00 AM
    • At/above 20-bar EMA, which is above EMA10 of EMA50
  • Bias: Up
15-Minute (e-mini future)
  • Bollinger Band (20, 2.0) is drifting up since 2:45 PM on Thursday
  • The Bollinger Band is relatively narrow since 10:45 PM
  • Stochastic (9, 1, 3): %K is crossing above %D
  • Bias: Side-Up

Previous Session

Major U.S. indices closed higher on Thursday, December 5 in mostly lower volume. Dow Jones Industrial Average and Russell 2000 traded in higher volume. Many major indices made candlestick pattern that showed indecision.

From Briefing.com:

The S&P 500 increased 0.2% on Thursday in a mixed session, as investors continued to follow the latest trade headlines with muted conviction. The Dow Jones Industrial Average (+0.1%), Nasdaq Composite (+0.1%), and Russell 2000 (+0.1%) each increased 0.1%.

[…]

U.S. Treasuries finished the session on a lower note. The 2-yr yield increased one basis point to 1.59%, and the 10-yr yield increased two basis points to 1.80%. The U.S. Dollar Index declined 0.3% to 97.38. WTI crude finished little changed at $58.45/bbl as OPEC+ convened in Vienna to discuss production cuts.

[…]

• Initial claims for the week ending November 30 dropped by 10,000 to 203,000 (Briefing.com consensus 221,000). Continuing claims for the week ending November 23 increased by 51,000 to 1.693 million.
o The key takeaway from this report is the understanding that initial claims dropped back close to the lowest levels on record, which will contribute to a belief that the labor market remains tight.
• The key takeaway from this report is the understanding that initial claims dropped back close to the lowest levels on record, which will contribute to a belief that the labor market remains tight. The narrowing in the deficit was a function of exports (-$0.4 billion) declining less than imports (-$4.3 billion).
o The key takeaway from the report, however, is that a decline in both exports and imports for the second straight month is not a hallmark of a global economy running strong.
• The Factory Orders report for October increased 0.3% (Briefing.com consensus +0.3%), and the September reading was revised to -0.3% (from -0.6%).

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