Market Remarks

Morning Notes – Monday December 16, 2019

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are higher
  • Moving higher since 11:30 AM on Friday
  • The odds are for an up day with increased chances of sideways to down move from current level – watch for break above 3195.50 and break below 3178.75
  • Key economic data due:
    • Empire State Manufacturing Index ( 3.5 vs. 5.1 est. ; prev. 2.9 ) at 8:30 AM
    • Flash Manufacturing PMI  ( 52.6 est.; pre. 52.6) at 9:45 AM
    • Flash Services PMI ( 52.0 est. ; prev.51.6 ) at 9:45 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 3167.19, 3156.51 and 3150.30
  • Critical resistance levels for S&P 500 are 3195.50 3200.00 and 3208.32
  • Key levels for eMini futures: break above 3190.00, the high of 8:30 AM and break below 3178.75, the low of 1:00 AM

Pre-Open

  • On Friday, at 4:00 PM, S&P future closed at 3169.75 and the index closed at 3168.80 – a spread of about -0.50 points; futures closed at 3172.00 for the day; the fair value is -2.25
  • Pre-NYSE session open, futures are higher – at 9:00 AM, S&P 500 futures were up by +17.50; Dow by +77 and NASDAQ by +54.00

Markets Around The World

  • Markets in the East closed mostly lower – Shanghai and Sydney closed higher
  • European markets are higher
  • Currencies:
    Up Down
    • EUR/USD
    • GBP/USD
    • USD/JPY
    • AUD/USD
    • NZD/USD
    • INR/USD
    • Dollar index
    • USD/CHF
    • USD/CAD
  • Commodities:
    Up Down
    • Crude Oil
    • NatGas
    • Gold
    • Silver
    • Copper
    • Platinum
    • Palladium
    • Coffee
    • Cotton
    • Cocoa
    • Sugar
  • Bonds
    • 10-yrs yield is at 1.857%, up from December 13 close of 1.819%;
    • 30-years is at 2.280%, up from 2.250%
    • 2-years yield is at 1.630%, up from 1.609%
    • The 10-Year-&-2-Year spread is at 0.227 up from 0.210
  • VIX
    • Is at 11.97 down from December 13 close of 12.63; below 5-day SMA
    • Recent high was 16.90 on December 10; 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 December 13 was a green candle with large real body and small shadows
    • 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 +22.89 or +0.7%; the 5-week ATR is 52.34
  • Last week’s pivot point=3159.29, R1=3192.29, R2=3215.78; S1=3135.70, S2=3102.60; R1 pivot level was breached
  • Third up week in a row; fourth in last five weeks and ninth in last ten weeks
  • All time highs; 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 doji candle
    • %K is crossing below %D; just below 90
    • RSI-9 is just near 70 and 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 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)
  • Trending higher since 10:00 AM on December 3 in steps
    • RSI-21 moving around 70
    • %K is crisscrossing %D above 90
  • Above 20-bar EMA, which is above EMA10 of EMA50
  • Bias: Up
30-Minute (e-mini future)
  • Drifting higher since 11:30 AM on Friday; making a double top
    • RSI-21 moving above 60
    • %K is crisscrossing %D above 90
    • Above 20-bar EMA, which is above EMA10 of EMA50
  • Bias: Up
15-Minute (e-mini future)
  • Bollinger Band (20, 2.0) is drifting sideways to up since 6:00 PM on Sunday
  • The Bollinger Band was relatively narrow till 6:45 AM; expanding since with price walking up the upper band
  • Stochastic (9, 1, 3): %K is crisscrossing %D above 80
  • Bias: Up

Previous Session

Major U.S. indices closed mixed on Friday, December 13 in lower volume. SA&P 500, Dow Jones Industrial Average and NASDAQ Composite closed higher. Russell 2000, Dow Jones Transportation Average NYSE Composite and Wilshire 5000 Total Market Index closed lower. For the week, major U.S. indices closed higher in higher volume.

From Briefing.com:

It was another record-setting week in which the U.S. and China reached a Phase One trade deal that helped avoid the Dec. 15 tariffs. The S&P 500 (+0.7%), Dow Jones Industrial Average (+0.4%), and Nasdaq Composite (+0.9%) set new intraday highs. The Russell 2000 increased 0.3%.

Nine of the 11 S&P 500 sectors finished higher, with the information technology sector (+2.0%) outperforming by a wide margin amid strength in the semiconductor space. The Philadelphia Semiconductor Index rose 4.2%. The real estate sector (-2.6%) greatly underperformed, and the communication services sector (-0.7%) finished modestly lower.

[…]

Trade dominated the headlines and dictated price action, but this week also included FOMC and ECB policy decisions, a UK election, government deals, and the Retail Sales Report and Consumer Price Index for November:

Both central banks left rates unchanged, with the Fed signaling no rate hike in 2020.

[…]

Retail sales and consumer prices for November increased less than expected.

U.S. Treasuries had another week of wild swings but ultimately finished near their unchanged marks from last week. Both the 2-yr yield and 10-yr yield declined one basis point each to 1.60% and 1.82%, respectively. The U.S. Dollar Index fell 0.5% to 97.19. WTI crude rose 2.8% (+$1.66) to $60.11/bbl.

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