Morning Notes – Tuesday November 5, 2019

/ November 5, 2019

Directional Bias For The Day:

  • S&P Futures are higher;
  • The odds are for a sideways to an up day – watch for break below 3072.50 for change of fortune
  • Key economic data due:
    • Final Service PMI ( 51.0 est.; prev. 51.0) at 9:45 AM
    • ISM Non-Manufacturing PMI ( 53.5 est. ; prev. 52.6) at 10:00 AM
    • JOLTS Opening ( 7.06M est.; prev. 7.05M) at 10:00 AM
    • IBD/TIPP Economic Optimism ( 53.2 est.; prev. 52.6 )

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 3074.90, 3066.72 and 3050.72
  • Critical resistance levels for S&P 500 are 3084.02, 3089.78 and 3094.35
  • Key levels for eMini futures: break above 3085.75, the high of 6:30 PM and break below 3077.00, the low of 8:00 PM

Pre-Open

  • On Monday, at 4:00 PM, S&P future closed at 3076.50 and the index closed at 3078.27 – a spread of about -1.75 points; futures closed at 3075.75 for the day; the fair value is +0.75
  • Pre-NYSE session open, futures are higher – at 8:45 AM, S&P 500 futures were up by +7.25; Dow down by +86 and NASDAQ by +22.25

Markets Around The World

  • Markets in the East closed mostly higher – Mumbai was down
  • European markets are mostly higher – Switzerland is lower
  • Currencies:
    Up Down
    • Dollar index
    • GBP/USD
    • USD/JPY
    • USD/CHF
    • AUD/USD
    • NZD/USD
    • EUR/USD
    • USD/CAD
    • INR/USD
  • Commodities:
    Up Down
    • Crude Oil
    • NatGas
    • Copper
    • Sugar
    • Coffee
    • Cotton
    • Gold
    • Silver
    • Platinum
    • Palladium
    • Cocoa
  • Bonds
    • 10-yrs yield is at 1.837%, up from November 4 close of 1.786%;
    • 30-years is at 2.323%, up from 2.273%
    • 2-years yield is at 1.617%, up from 1.581%
    • The 10-Year-&-2-Year spread is at 0.220 up from 0.205
  • VIX
    • Is at 12.96 up from November 4 close of 12.83; above 5-day SMA 12.726
    • Recent high was 13.95 on October 31; recent low was 12.19 on October 31

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

Monthly
  • Uptrend resumed
  • September was a green candle with small upper shadow and lower shadow longer than the real body
    • 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 in May 2019
Weekly:
  • The week ending on November 1 was a large green candle with almost no upper shadow and small lower shadow
    • At the upper bound of a broadening pattern
    • Stochastic (9,1, 3): %K is above %D; above 90;
    • RSI (9) has turned up and near 70
  • Last week was up +44.36 or +1.5%; the 5-week ATR is 73.63
  • Last week’s pivot point=3052.35, R1=3081.51, R2=3096.11; S1=3037.75, S2=3008.59; R1/R2 pivot levels were breached
  • An up week; fourth in last five weeks and seventh in last ten weeks
  • 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 small doji candle that gapped up at the open;
    • %K is crisscrossing %D above 80
    • RSI-9 is below 8-day SMA
  • Above 20-day EMA, 50-day EMA, 100-day SMA and 200-day SMA;
  • Uptrend
2-Hour (e-mini future)
  • Drifting mostly sideways since 8:00 AM on Monday within a ten point band; uptrend since October 9
    • RSI-21 moving along 70 since 2:00 PM on November 1
    • %K is crisscrossing %D higher
  • Above 20-bar EMA, which is above EMA10 of EMA50
  • Bias: Up
30-Minute (e-mini future)
  • Moving sideways since 5:00 AM on Monday
    • RSI-21 moving between 50 and 65
    • %K is crisscrossing %D
    • At/above 20-bar EMA, which is above EMA10 of EMA50
  • Bias: Side-Up
15-Minute (e-mini future)
  • Bollinger Band (20, 2.0) is moving sideways since 6:00 AM on Monday
  • The Bollinger Band narrowed, relatively, from 1:45 AM to 4:45 AM; expanding slightly since
  • Stochastic (9, 1, 3): %K is crisscrossing %D higher
  • Bias: Side

Previous Session

Most major U.S. indices closed at all times highs on Monday, November 4 in mixed volume. Russell 2000 and Dow Jones Transportation Average did not make all time highs. S&P 500, Russell 2000 and NASDAQ Composite traded in lower volume.

From Briefing.com:

The S&P 500 (+0.4%) and Nasdaq Composite (+0.6%) continued to set new highs on Monday, with the Dow Jones Industrial Average (+0.4%) finally breaking above its prior high from July following some positive-sounding trade comments. The Russell 2000 (+0.5%) kept pace with the large-cap indices.

[…]

The S&P 500 industrials (+1.2%), financials (+0.9%), and materials (+0.8%) sectors followed suit with gains that were also more than the benchmark index, as did the Dow Jones Transportation Average (+2.3%) and Philadelphia Semiconductor Index (+2.2%).

On the other hand, losses in the defensive-oriented utilities (-1.3%), real estate (-1.1%), consumer staples (-0.9%), and health care (-0.4%) sectors restrained further gains in the broader market.

[…]

U.S. Treasuries ended the session lower, as the risk-on trading sentiment in the stock market decreased demand for the safe-haven asset class. The 2-yr yield increased three basis points to 1.59%, and the 10-yr yield increased six basis points to 1.79%. The U.S. Dollar Index advanced 0.3% to 97.55.

Monday’s economic data was limited to the Factory Orders report for September, which declined 0.6% (Briefing.com consensus -0.5%) following an unrevised 0.1% decline in August.

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