Market Remarks

Morning Notes – Wednesday December 18, 2019

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are little changed
  • Moving sideways since 9:30 AM on Monday
  • The odds are for a sideways day – watch for break above 3203.50 and break below 3192.00 for clarity
  • No key economic data due:

Directional Bias Before Open:

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

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 3198.22, 3201.11 and 3204.01
  • Key levels for eMini futures: break above 3203.50, the high of 9:30 AM on Tuesday and break below 3192.25, the low of 2:30 AM

Pre-Open

  • On Tuesday, at 4:00 PM, S&P future (March 2020) closed at 3195.50 and the index closed at 3192.52 – a spread of about +3.00 points; futures closed at 3195.50 for the day; the fair value is +0.00
  • Pre-NYSE session open, futures are little changed to up – at 8:30 AM, S&P 500 futures were up by +3.25; Dow by +28 and NASDAQ up by +11.75

Markets Around The World

  • Markets in the East closed mixed – Shanghai, Tokyo and Seoul closed lower; Hong Kong, Sydney Mumbai and Singapore closed higher
  • European markets are mostly higher – Germany is down
  • Currencies:
    Up Down
    • Dollar index
    • USD/JPY
    • USD/CHF
    • EUR/USD
    • GBP/USD
    • AUD/USD
    • NZD/USD
    • USD/CAD
    • INR/USD
  • Commodities:
    Up Down
    • Sugar
    • Cotton
    • Cocoa
    • Crude Oil
    • NatGas
    • Gold
    • Silver
    • Copper
    • Platinum
    • Palladium
    • Coffee
  • Bonds
    • 10-yrs yield closed at 1.887%, down from December 16 close of 1.892%;
    • 30-years is at 2.313%, up from 2.310%
    • 2-years yield is at 1.631%, up from 1.626%
    • The 10-Year-&-2-Year spread is at 0.256 down from 0.266
  • VIX
    • Is at 12.04 down from December 17 close of 12.29; 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 red candle with almost no lower shadow and an upper shadow that is equal to two times the real body
    • %K is 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 since 10:00 AM on Monday in a narrow range; Trending higher since 10:00 AM on December 3 in steps
    • RSI-21 moving around 55
    • %K has crossed above %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 10:00 AM on Monday; making a double top
    • RSI-21 moving around 50
    • %K is below %D since 4:30 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 2:15 PM on Monday
  • The Bollinger Band is relatively narrow since 2:30 PM on Monday – neither narrow nor expanding
  • Stochastic (9, 1, 3): %K is crossing above %D above 80
  • Bias: Side

Previous Session

Major U.S. indices closed higher on Tuesday, December 17 in mostly lower volume. Dow Jones Transportation Average traded in higher volume. The day’s price-action was subdued and range was small.

From Briefing.com:

The S&P 500 finished flat (+0.03%) on Tuesday in a tight-ranged, and lackluster, session. It was still technically a record close, though, joining the Dow Jones Industrial Average (+0.1%) and Nasdaq Composite (+0.1%) further in record territory. The Russell 20000 outperformed with a 0.5% gain.

[…]

Six of the 11 sectors did finish lower, though, with the weakest performer being the real estate sector (-1.2%). No other sector finished down more than 0.2% (information technology).

[…]

U.S. Treasuries finished little changed. Both the 2-yr yield and 10-yr yield remained unchanged at 1.63% and 1.89%, respectively. The U.S. Dollar Index increased 0.2% to 97.22. WTI crude rose 1.2%, or $0.69, to $60.90/bbl.

[…]

• Total housing starts increased 3.2% m/m to a seasonally adjusted annual rate of 1.365 million (Briefing.com consensus 1.340 million) while total building permits increased 1.4% m/m to a seasonally adjusted annual rate of 1.482 million (Briefing.com consensus 1.400 million).
o The report contained some noise, yet the key takeaway is that single-family starts (+2.4%) and permits (+0.8%) recorded solid increases.
• Industrial production increased 1.1% in November (Briefing.com consensus 0.8%) after declining a revised 0.9% (from -0.8%) in October. The capacity utilization rate increased to 77.3% (Briefing.com consensus 77.4%) from a revised 76.6% (from 76.7%) in October.
o The key takeaway from the report is the November rebound was fueled by the end of the strike at GM. Excluding motor vehicles and parts, industrial production increased 0.5%.
• The October Job Openings and Labor Turnover Survey showed job openings increase to 7.267 million from a revised 7.032 million in September (from 7.024 million).

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