Morning Notes – Friday January 10, 2020

/ January 10, 2020

Directional Bias For The Day:

  • S&P Futures are higher;
  • Non-Farm Payroll day
  • The odds are for an up day – watch for reaction following payroll report; watch break below 3264.25 for change of fortune
  • Key economic data due:
    • Non-Farm Employment Change ( 162K est.; prev. 266K ) at 8:30 AM
    • Average Hourly Earnings ( 0.3% est. ; prev. 0.2%) at 8:30 AM
    • Unemployment Rate ( 3.5% est.; prev. 3.5% ) at 8:30 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 3275.12, 3269.74 and 3263.67
  • Critical resistance levels for S&P 500 are 3278.96, 3283.23 and 3290.87
  • Key levels for eMini futures: break above 3286.75, the high of 6:00 AM and break below 3279.50, the low of 3:30 AM

Pre-Open

  • On Thursday, at 4:00 PM, S&P future (March 2020) closed at 3275.50 and the index closed at 3274.70 – a spread of about +0.75 points; futures closed at 3276.00 for the day; the fair value is -0.50
  • Pre-NYSE session open, futures are higher – at 6:45 AM, S&P 500 futures were up by +9.50; Dow by +65 and NASDAQ by +39.50

Markets Around The World

  • Markets in the East closed mostly higher – Shanghai was down
  • European markets are higher
  • Currencies:
    Up Down
    • Dollar index
    • GBP/USD
    • USD/JPY
    • USD/CHF
    • AUD/USD
    • NZD/USD
    • USD/CAD
    • INR/USD
    • EUR/USD
  • Commodities:
    Up Down
    • Crude Oil
    • NatGas
    • Copper
    • Platinum
    • Palladium
    • Sugar
    • Coffee
    • Cotton
    • Cocoa
    • Gold
    • Silver
  • Bonds
    • 10-yrs yield closed at 1.858%, down from January 8 close of 1.874%;
    • 30-years is at 2.330%, down from 2.358%
    • 2-years yield is at 1.584%, up from 1.581%
    • The 10-Year-&-2-Year spread is at 0.274 down from 0.293
  • VIX
    • Is at 12.41 down from January 9 close of 12.54; below 5-day SMA
    • Recent high was 16.39 on January 6; recent low was 11.72 on December 26

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

Monthly
  • Uptrend
  • December 2019 was a relatively large green candle with small upper shadow and a lower shadow half the size of the real body; fourth up month in a row and tenth in 2019
    • Stochastic %K is above %D and above 90
    • RSI-9 is breaking above a downtrend line from January 2018 high; above 70
    • 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 January 3 was a doji candle
    • Continuing the break above the upper bound of a broadening pattern
    • Stochastic (9,1, 3): %K crossed above %D; above 90; potential bearish divergence
    • RSI (9) is above 80
  • Last week was down -5.17 or -0.2%; the 5-week ATR is 53.45
  • Last week’s pivot point=3235.01, R1=3257.98, R2=3281.12; S1=3211.87, S2=3188.90; R1/S1 pivot levels were breached
  • First down week in last five weeks and second in last ten weeks
  • Near all time highs; Last swing low, 2822.12, was the low on August 5, 2019; last swing high was 3027.98, made during the week of July 22, 2019
  • Above 10-week EMA; above 39-week SMA and 89-week SMA
  • Uptrend
Daily
  • A green candle with almost no upper and lower shadows; all time highs and breaking away from past few days’ consolidation
    • %K is crossing above %D; potential %D Bearish Divergence
    • RSI-9 is turning up above 70; above 8-day SMA; potential bearish divergence
  • Above 20-day EMA, 50-day EMA, 100-day SMA and 200-day SMA;
  • Uptrend
2-Hour (e-mini future)
  • Moving up since 8:00 PM on January 7 after a sharp sudden decline; essentially moving sideways since 4:00 PM on December 26, though showing signs of breaking out;
    • RSI-21 is flattening above 70
    • %K is crisscrossing %D near 80
  • A broadening pattern is emerging; price breaking its upper bound
  • Above 20-bar EMA, which is above EMA10 of EMA50
  • Bias: Up
30-Minute (e-mini future)
  • Moving up since 7:30 PM on January 7 after a sudden sharp decline of nearly 50 points
    • RSI-21 is moving around 60 since 11:00 AM on January 8;
    • %K is crossing above %D at 4:00 AM from near 30
  • Above 20-bar EMA, which is above EMA10 of EMA50
  • Bias: Up
15-Minute (e-mini future)
  • Bollinger Band (20, 2.0) is trending up since 2:00 AM on Wednesday
  • The Bollinger Band is relatively stable and small since 2:00 AM on Thursday
  • Stochastic (9, 1, 3): %K crossed below %D at 6:30 AM; potential Bearish Divergence
  • Bias: Up

Previous Session

Major U.S. indices closed higher on Thursday, January 9 in lower volume. Major indices continue to breakout from few day’s consolidation. Most major indices except Dow Jones Transportation Average and Russell 2000 made all time highs. On one S&P sectors – Real Estate – closed down.

From Briefing.com:

The S&P 500 rose 0.7% and closed at a record high on Thursday, as the market extended Wednesday’s relief rally amid gains across all 11 S&P 500 sectors. The Dow Jones Industrial Average (+0.7%) and Nasdaq Composite (+0.8%) also closed at record highs, while the Russell 2000 increased just 0.1%.

[…]

U.S. Treasuries finished the session slightly higher. The 2-yr yield declined one basis point to 1.57%, and the 10-yr yield declined two basis points to 1.86%. The U.S. Dollar Index increased 0.1% to 97.44. WTI crude declined 0.1% to $59.54/bbl.

[…]

• Initial jobless claims for the week ending January 4 decreased by 9,000 to 214,000 (Briefing.com consensus 225,000). Continuing claims for the week ending December 28 increased by 75,000 to 1.803 million.
o The key takeaway from the report is that initial claims have settled back down at lower levels, which reflect ongoing tightness in the labor market.

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