Morning Notes – Wednesday, December 18, 2024

Directional Bias for the Day:

• S&P Futures are higher at 8:15 AM. They have been drifting higher since 6:00 PM on Tuesday and are up more than 30 points.
• Odds are for an up day. Watch for a break above 6055.75 for a change in sentiments.
• The notable economic data due during the day:
  • Building Permits (1.43M est.; prev. 1.42M) at 8:30 AM.
  • Housing Starts (1.35M est.; prev. 1.31M) at 8:30 AM.
  • Current Account (-286B est.; prev. -267B) at 8:30 AM.
  • Federal Funds Rate (4.50% est.; prev. 4.75%) at 2:00 PM.
  • FOMC Economic Projections at 2:00 PM
  • FOMC Statement at 2:00 PM
  • FOMC Press Conference art 2:30 PM

Key Levels:

• Critical support levels for the S&P 500 are 6035.77, 6029.89, and 6003.98.
• Critical resistance levels for the S&P 500 are 6068.10, 6085.19, and 6092.57.
• The key levels for E-mini futures are 6079.25, the high at 9:30 PM on Monday and 6055.75, the low at 10:30 PM on Tuesday.

Pre-Open

• On Tuesday at 4:00 PM, S&P futures (December 2024) closed at 6054.00, and the index closed at 6050.61 – a spread of about +3.50 points; the futures closed at 6053.75; the fair value is +0.50.
• Pre-NYSE session open, futures were higher – at 8:00 AM, the S&P 500 futures were up by +18.50, Dow by +157, and NASDAQ by +59.75.

Markets Around the World

• Markets in the East closed mixed – Shanghai, Hong Kong, and Seoul closed up; Tokyo, Sydney, Mumbai, and Singapore were down.
• European markets are mostly higher – Switzerland is lower.
• Currencies (Compared to two weeks ago):

• Commodities (Compared to two weeks ago):
  • Energy futures are higher.
  • Precious metals are lower.
  • Industrial metals are lower.
  • Soft commodities are mostly lower.
• Treasuries (Compared to two weeks ago)
  • The 10-year yield closed at 4.405, up +17.7 basis points from two weeks ago.
  • The 30-year is at 4.593%, up +18.4 basis points.
  • The 2-year yield is at 4.266%, up +7.8 basis points.
  • The 10-Year-&-2-Year spread is at 0.139, up from 0.040.
  • The 30-Year-&-10-Year spread is at 0.188, down from 0.181.
• VIX
  • At 15.28 @ 8:00 AM; down from the last close; above the 5-day SMA
  • Recent high = 18.79 on November 20; low = 12.89 on December 4; Sentiment: Risk-On

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

Previous Session

Major U.S. indices closed lower on Tuesday, December 17 in mostly higher volume. NASDAQ Composite traded in lower volume. DJIA has closed down for the nine days and 12 out of past 14 days.

The dollar index was up; energy futures were mixed; precious metals were down; industrial metals were mixed; and soft commodities closed down. The US Treasury yields were mixed and so were the bonds down. All but one S&P sectors – Discretionary – closed down.

From Briefing.com

The stock market closed lower at the index level. The Russell 2000 underperformed, dropping 1.2%, while the S&P 500 (-0.4%), Nasdaq Composite (-0.3%), and Dow Jones Industrial Average (-0.6%). Many names participated in a broad retreat, leading the equal-weighted S&P 500 to decline 0.8%.

The 10-yr note yield, which was at 4.44% in front of this morning’s data, settled two basis points lower than yesterday at 4.38%. The 2-yr yield, which was at 4.28% before 8:30 ET, settled unchanged from yesterday at 4.24%.

• Nasdaq Composite: +34.0% YTD
• S&P 500: +26.9% YTD
• S&P Midcap 400: +16.4% YTD
• Russell 2000: +15.2% YTD
• Dow Jones Industrial Average: +15.3% YTD

Reviewing today’s economic data:

• November Retail Sales 0.7% (Briefing.com consensus 0.5%); Prior was revised to 0.5% from 0.4%, November Retail Sales ex-auto 0.2% (Briefing.com consensus 0.4%); Prior was revised to 0.2% from 0.1%
  • The key takeaway from the report is in the ex-auto number, which was up modestly and a reflection of some softening spending activity given that it is not adjusted for price changes. In other words, the overall sales increase, excluding autos, appears to be more price driven than volume driven.
• November Industrial Production -0.1% (Briefing.com consensus 0.3%); Prior was revised to -0.4% from -0.3%, November Capacity Utilization 76.8% (Briefing.com consensus 77.3%); Prior was revised to 77.0% from 77.1%
  • The key takeaway from the report is that industrial production didn’t show any strong rebound from the prior two months that were adversely impacted by the hurricanes. There was some modest strength in manufacturing output, but total industrial production is still lagging.
• October Business Inventories 0.1% (Briefing.com consensus 0.2%); Prior was revised to 0.0% from 0.1%
• December NAHB Housing Market Index 46 (Briefing.com consensus 47); Prior 46