Market Remarks

Morning Notes – Wednesday January 22, 2020

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are higher;
  • The odds are for an up day – watch for break below 3319.25 for change of fortune
  • Key economic data due:
    • Existing Home Sales ( est. 5.43M; prev. 5.35M) at 10:00 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 3318.40, 3309.97 and 3302.97
  • Critical resistance levels for S&P 500 are 3329.88, 3335.58  and 3341.36
  • Key levels for eMini futures: break above 3336.50, the high of 9:30 PM and break below 3330.50, the low of 6:30 AM

Pre-Open

  • On Tuesday, at 4:00 PM, S&P future (March 2020) closed at 3321.25 and the index closed at 3320.79 – a spread of about -0.50 points; futures closed at 3319.50 for the day; the fair value is +1.75
  • Pre-NYSE session open, futures are higher – at 8:15 AM, S&P 500 futures were up by +13.50; Dow by +74 and NASDAQ by +60.25

Markets Around The World

  • Markets in the East closed mostly up – Mumbai was down;
  • European markets are mostly higher – Spain and Italy are down
  • Currencies:
    Up Down
    • EUR/USD
    • GBP/USD
    • USD/JPY
    • USD/CHF
    • AUD/USD
    • NZD/USD
    • INR/USD
    • Dollar index
    • USD/CAD
  • Commodities:
    Up Down
    • NatGas
    • Palladium
    • Sugar
    • Coffee
    • Cotton
    • Cocoa
    • Crude Oil
    • Gold
    • Silver
    • Copper
    • Platinum
  • Bonds
    • 10-yrs yield closed at 1.769%, down from January 20 close of 1.836%;
    • 30-years is at 2.231%, down from 2.296%
    • 2-years yield is at 1.526%, down from 1.563%
    • The 10-Year-&-2-Year spread is at 0.243 down from 0.273
  • VIX
    • Is at 12.34 down -0.51 from January 21; 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 17 was a green candle with almost no lower shadow and small upper shadow
    • 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 up +64.27 or +2.0%; the 5-week ATR is 52.65
  • Last week’s pivot point=3309.31, R1=32350.019, R2=3370.76; S1=3288.74, S2=3247.86; R1/R2 pivot levels were breached
  • An up week; fourth in last five weeks and eight in last ten weeks
  • At 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 relatively small red candle with small upper and smaller lower shadows; near all time highs
    • %K is crossing below %D above 90;
    • RSI-9 is turning down 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 Monday; upswing since 6:00 PM on January 7
    • RSI-21 bounced above 60 after declining from above 70 in steps to below 30
    • %K is crisscrossing %D around 80
  • Above 20-bar EMA, which is above EMA10 of EMA50
  • Bias: Up
30-Minute (e-mini future)
  • Moving up since 3:30 AM on Tuesday
    • RSI-21 is moving around 60
    • %K is crisscrossing %D higher
  • At/above 20-bar EMA but below EMA10 of EMA50
  • Bias: Side-Up
15-Minute (e-mini future)
  • Bollinger Band (20, 2.0) is moving sideways to down since 1:30 AM
  • The Bollinger Band narrowed from 2:30 AM to 3:30 AM; expanded slightly till 7:30 AM
  • Stochastic (9, 1, 3): %K is below %D since 7:30 AM;
  • Bias: Up-Side

Previous Session

Major U.S. indices closed lower on Tuesday, January 21 in mostly lower volume. Dow Jones Transportation Average traded in higher volume.

All but four S&P sectors – Consumer Staples, Utilities, Health Care and Real Estate – closed down.

From Briefing.com:

The S&P 500 declined 0.3% on Tuesday, as headlines about the coronavirus outbreak helped provide a convenient excuse to take some profits, while a delay in Boeing’s (BA 313.37, -10.78, -3.3%) 737 MAX timeline to mid-2020 further pressured the Dow Jones Industrial Average (-0.5%). The Nasdaq Composite lost 0.2%, and the Russell 2000 lost 0.8%.

[…]

The 2-yr yield fell four basis points to 1.52%, and the 10-yr yield fell seven basis points to 1.77%. The U.S. Dollar Index finished flat at 97.58. WTI crude declined 0.5%, $0.30, to $58.25/bbl.

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