Market Remarks

Morning Notes – Wednesday December 11, 2019

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are little changed to higher;
  • Moving mostly sideways since 8:30 AM on Tuesday
  • FOMC rate decision day
  • The odds are for a sideways day – watch for break above 3143.50 and break below 3127.50 for clarity
  • Key economic data due:
    • CPI ( 0.3% vs. 0.2% est. ; prev. 0.4%) at 8:30 AM
    • Core CPI (0.2% vs. 0.2% est. ; prev., 0.2%) at 8:30 AM
    • FOMC Statement and Funds Rat at 2:00 PM
    • FOMC Press Conference at 2:30 PM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 3127.78, 3124.90 and 3117.43
  • Critical resistance levels for S&P 500 are 3142.12, 3150.37 and 3154.26
  • Key levels for eMini futures: break above 3143.50, the high of 3:00 AM and break below 3127.75, the low of 3:30 PM on Tuesday

Pre-Open

  • On Tuesday, at 4:00 PM, S&P future closed at 3132.75 and the index closed at 3132.52 – a spread of about +0.25 points; futures closed at 3136.00 for the day; the fair value is -3.25
  • Pre-NYSE session open, futures are mixed – at 8:15 AM, S&P 500 futures were up by +3.00; Dow down by -34 and NASDAQ up by +17.50

Markets Around The World

  • Markets in the East closed mostly higher – Tokyo was down
  • European markets are mostly higher – U.K. and Switzerland are lower
  • Currencies:
    Up Down
    • Dollar index
    • USD/JPY
    • USD/CHF
    • AUD/USD
    • NZD/USD
    • USD/CAD
    • INR/USD
    • EUR/USD
    • GBP/USD
  • Commodities:
    Up Down
    • NatGas
    • Gold
    • Silver
    • Copper
    • Platinum
    • Palladium
    • Coffee
    • Crude Oil
    • Sugar
    • Cotton
    • Cocoa
  • Bonds
    • 10-yrs yield closed at 1.833%, up from December 9 close of 1.829%;
    • 30-years is at 2.253%, down from 2.264%
    • 2-years yield is at 1.654%, up from 1.621%
    • The 10-Year-&-2-Year spread is at 0.179 down from 0.208
  • VIX
    • Is at 15.59 down from December 10 close of 15.68; above 5-day SMA
    • Recent high was 17.99 on December 3; recent low was 12.25 on December 9

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 December 6 was a green candle that looks like a gravestone doji near the all time highs
    • Continuing the break above the upper bound of a broadening pattern
    • Stochastic (9,1, 3): %K crossed above %D; above 90;
    • RSI (9) is above 70
  • Last week was up +4.93 or +0.2%; the 5-week ATR is 47.40
  • Last week’s pivot point=3122.28, R1=3174.23, R2=3202.55; S1=3093.96, S2=3042.01; S1/S2/S3 pivot levels were breached
  • Second up week; fourth 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 doji like candle with small shadows
    • %K is crossing below %D; just above 70
    • RSI-9 is below 60 and 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 lower to sideways since 12:00 PM on December 6 after making a high of 3151.00 near all time highs of 3158.00 made on December 2; bouncing after declining to a low of 3116.25
    • RSI-21 moving around 50
    • %K is below %D
  • At/above 20-bar EMA, which is above EMA10 of EMA50
  • Bias: Up-Side
30-Minute (e-mini future)
  • Drifting sideways to down since 9:00 AM on Friday; bouncing up since 6:00 AM
    • RSI-21 moving around 50
    • %K is above %D since 6:00 AM
    • At/above 20-bar EMA; at/above EMA10 of EMA50
  • Bias: Side
15-Minute (e-mini future)
  • Bollinger Band (20, 2.0) is drifting sideways to down since 1:00 PM on Tuesday
  • The Bollinger Band is relatively narrow
  • Stochastic (9, 1, 3): %K is crisscrossing %D higher
  • Bias: Side

Previous Session

Major U.S. indices closed mostly lower on Tuesday, December 10 in mostly higher volume. Russell 2000 closed up and Dow Jones Industrial Average traded in lower volume. Indices opened to the down side after futures had risen in pre-open trading. Indices made day’s low in first half hour of trading before rising and making the day’s high before noon. Then they mostly traded down and closed near mid-range before testing the lows again.

From Briefing.com:

The S&P 500 declined 0.1% on Tuesday in a tight-ranged session, as investors digested several developments on trade, including a report that the U.S. and China could delay the Dec. 15 tariffs. The Dow Jones Industrial Average (-0.1%) and Nasdaq Composite (-0.1%) also lost 0.1%, while Russell 2000 (+0.1%) added 0.1%.

[…]

Most S&P 500 sectors wavered near their unchanged marks throughout the session. The real estate (-0.7%) and materials (-0.6%) sectors diverted with relatively larger declines, while the energy (+0.2%) and health care (+0.2%) sectors finished higher.

[…]

U.S. Treasuries finished the session mixed. The 2-yr yield increased three basis points to 1.65%, and the 10-yr yield was unchanged at 1.83%. The U.S. Dollar Index declined 0.2% to 97.45. WTI crude increased 0.4%, or $0.24, to $59.21/bbl.

[…]

• Nonfarm business sector labor productivity decreased 0.2% in the third quarter (Briefing.com consensus -0.1%), according to the revised estimate, versus a previously reported 0.3% decrease. Unit labor costs increased 2.5% (Briefing.com consensus 3.4%) versus a previously reported 3.6% increase.
o The key takeaway from the report remains the same as the preliminary estimate: the decline in productivity and the jump in unit labor costs points to profit margin pressures for businesses.
• The NFIB Small Business Optimism Index for November increased to 104.7 from 102.4 in October.

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