Morning Notes – Wednesday November 6, 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 3067.50 for change of fortune
• Key economic data due:
  • Prelim Non-Farm Productivity (-0.3% vs. 1.0% est.; prev. 2.3%) at 8:30 AM
  • Prelim Unit Labor Costs ( 3.6% vs. 2.2% est. ; prev. 2.6%) at 8:30 AM

Directional Bias Before Open:

Key Levels:

• Critical support levels for S&P 500 are 3072.15, 3066.72 and 3050.72
• Critical resistance levels for S&P 500 are 3081.66, 3088.71 and 3093.46
• Key levels for eMini futures: break above 3078.00, the high of 2:30 PM and break below 3067.50, the low of 8:00 PM

Pre-Open

• On Tuesday, at 4:00 PM, S&P future closed at 3072.75 and the index closed at 3074.62 – a spread of about -2.00 points; futures closed at 3072.00 for the day; the fair value is +0.75
• Pre-NYSE session open, futures are higher – at 8:30 AM, S&P 500 futures were up by +3.00; Dow down by +30 and NASDAQ by +8.00

Markets Around The World

• Markets in the East closed mostly higher – Shanghai and Sydney were down
• European markets are mostly higher – U.K. and Spain are lower
• Currencies:
  

  Up	Down
  EUR/USD GBP/USD USD/CHF AUD/USD NZD/USD USD/CAD INR/USD	Dollar index USD/JPY

• Commodities:
  

  Up	Down
  NatGas Gold Coffee Cotton	Crude Oil Silver Palladium Copper Platinum Sugar Cocoa

• Bonds
  • 10-yrs yield closed at 1.866%, up from November 4 close of 1.786%;
  • 30-years is at 2.348%, up from 2.273%
  • 2-years yield is at 1.629%, up from 1.581%
  • The 10-Year-&-2-Year spread is at 0.237 up from 0.205
• VIX
  • Is at 13.30 up from November 5 close of 13.10; above 5-day SMA 12.95
  • 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:

Previous Session

Most major U.S. indices closed mixed on Tuesday, November 5 in mostly lower volume. S&P 500, NYSE Composite and Wilshire 5000 Total Market Index closed lower. Dow Jones Industrial Average traded in higher volume. The day’s price action was sideways or indecisive.

From Briefing.com:

The S&P 500 shed 0.1% on Tuesday in a mixed session that saw more trade headlines and a further increase in Treasury yields. The Dow Jones Industrial Average (+0.1%), Nasdaq Composite (+0.01%), and Russell 2000 (+0.1%) finished just above their flat lines.

[…]

U.S. Treasuries continued to retreat after the report, which sent yields higher in a curve-steepening trade that contributed to the outperformance of the S&P 500 financials sector (+0.4%). The energy sector (+0.5%) was today’s leader, while the defensive-oriented real estate (-1.8%), utilities (-1.0%), and health care (-0.9%) sectors posted sizable losses.

The 2-yr yield rose four basis points to 1.63%, and the 10-yr yield rose eight basis points to 1.87%. The U.S. Dollar Index increased 0.4% to 97.94. WTI crude rose 1.0%, or $0.55, to $57.24/bbl.

[…]

• The ISM Non-Manufacturing Index for October increased to 54.7% (Briefing.com consensus 53.3%) from 52.6% in September.
o The key takeaway from the report is that it reflects an acceleration of expansion-based activity in October, which is a supportive consideration since the non-manufacturing sector accounts for a significantly larger slice of U.S. economic activity than the manufacturing sector does.
• The U.S trade deficit narrowed slightly in September to $52.5 billion, as expected, from a downwardly revised $55.0 billion (from -$54.9 billion) in August.
o The key takeaway from the report is that it wasn’t a narrowing driven necessarily by stronger demand. On the contrary, imports (-$4.4 billion) and exports (-$1.8 billion) both declined month-over-month, so the narrowing was simply a function of imports falling more than exports.
• The September Job Openings and Labor Turnover Survey showed that job openings declined to 7.024 million from a revised 7.301 million in August (from 7.051 million).