Market Remarks

Morning Notes – Tuesday December 17, 2019

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are higher
  • Moving sideways since 9:30 AM on Monday
  • The odds are for a sideways to an up day – watch for break above 3202.25 and break below 3192.00 for clarity
  • Key economic data due:
    • Building Permits ( 1.48M vs. 1.41M est. ; prev. 1.46M ) at 8:30 AM
    • Housing Starts ( 1.37M vs. 1.34M est.; prev. 1.32) at 8:30 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 3191.08, 3183.63 and 3167.19
  • Critical resistance levels for S&P 500 are 3198.23, 3205.01 and 3212.31
  • Key levels for eMini futures: break above 3202.25, the high of 8:30 AM and break below 3192.00, the low of 5:30 AM

Pre-Open

  • On Monday, at 4:00 PM, S&P future (March 2020) closed at 3196.00 and the index closed at 3191.45 – a spread of about +4.50 points; futures closed at 3198.50 for the day; the fair value is -2.50
  • Pre-NYSE session open, futures are mixed- at 8:30 AM, S&P 500 futures were up by +0.75; Dow down by -19 and NASDAQ up by +6.50

Markets Around The World

  • Markets in the East closed mostly higher – Sydney and Singapore closed lower
  • European markets are mostly lower – Italy is up
  • Currencies:
    Up Down
    • Dollar index
    • EUR/USD
    • USD/JPY
    • USD/CAD
    • INR/USD
    • GBP/USD
    • USD/CHF
    • AUD/USD
    • NZD/USD
  • Commodities:
    Up Down
    • Crude Oil
    • Gold
    • Copper
    • Platinum
    • Sugar
    • Cocoa
    • NatGas
    • Silver
    • Palladium
    • Coffee
    • Cotton
  • Bonds
    • 10-yrs yield closed at 1.892%, up from December 13 close of 1.819%;
    • 30-years is at 2.310%, up from 2.250%
    • 2-years yield is at 1.626%, up from 1.609%
    • The 10-Year-&-2-Year spread is at 0.266 up from 0.210
  • VIX
    • Is at 12.09 down from December 16 close of 12.14; 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 relatively small green candle with almost no lower shadow and an upper shadow that is equal to 2/3 of the real body
    • %K is crossing above %D; just above 90
    • RSI-9 is above 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)
  • Moving sideways to down since 10:00 AM on Monday; potential to break below a small double top; Trending higher since 10:00 AM on December 3 in steps
    • RSI-21 declined from around 70 to near 55
    • %K is crisscrossing %D lower; near 30
  • Above 20-bar EMA, which is above EMA10 of EMA50
  • Bias: Up-Side
30-Minute (e-mini future)
  • Drifting sideways to down since 10:00 AM on Monday; making a double top
    • RSI-21 declined from above 60 to below 50; back to 55
    • %K is above %D since 4:30 AM
    • At/above 20-bar EMA, above EMA10 of EMA50
  • Bias: Up-Side
15-Minute (e-mini future)
  • Bollinger Band (20, 2.0) is arching down since 1:30 AM
  • The Bollinger Band is relatively same size since 2:30 PM on Monday – neither narrow nor expanding
  • Stochastic (9, 1, 3): %K is crossing above %D above 80
  • Bias: Up-Side

Previous Session

Major U.S. indices closed higher on Monday, December 16 in mixed volume. NASDAQ Composite and Russell 2000 traded in lower volume. All but Dow Jones Transportation Average made and closed at all time highs.

From Briefing.com:

The stock market rose further into record territory on Monday, as the Phase One trade deal and an improving Chinese economy helped maintain the market’s bullish bias. The Nasdaq Composite (+0.9%) rose above the S&P 500 (+0.7%), Dow Jones Industrial Average (+0.4%), and Russell 2000 (+0.7%).

[…]

China’s industrial production and retail sales figures, which grew faster than expected in November, added to the positive economic outlook also shared by the homebuilders. For instance, the NAHB Housing Market Index hit its highest level since 1999, increasing to 76 in December (Briefing.com consensus 69) from 69 in November.

The S&P 500 energy (+1.4%), utilities (+1.3%), and health care (+1.1%) sectors each rose more than 1.0%. The market also continued to draw influential support from Apple (AAPL 279.86, +4.71, +1.7%).

[…]

U.S. Treasuries finished on a lower note, driving yields higher in a curve-steepening trade. The 2-yr yield increased three basis points to 1.53%, and the 10-yr yield increased seven basis points to 1.89%. The U.S. Dollar Index declined 0.1% to 97.05. WTI crude increased 0.2%, or $0.10, to $60.21/bbl.

[…]

• The NAHB Housing Market Index for December increased to 76 (Briefing.com consensus 69) from 69 in November, hitting its highest level since 1999.
• The Empire State Manufacturing Survey for December increased to 3.5 (Briefing.com consensus 3.5) from the prior month’s reading of 2.9.

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