Market Remarks

Morning Notes – Friday November 8, 2019

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are moving up since 12:00 AM after declining from all time high at 11:45 AM on Thursday;
  • The odds are for an up to sideways day; watch for break above 3097.00 and below 3076.75 for clarity
  • Key economic data due:
    • Prelim UoM Consumer Sentiment ( 96.0 est.; prev. 05.5) at 10:00 AM
    • Prelim UoM Inflation Expectations ( prev. 2.5%_ at 10:00 AM
    • Final Wholesale Inventories (-0.;3% est. ; prev. -0.3%) at 10:00 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 3080.23, 3065.89 and 3050.72
  • Critical resistance levels for S&P 500 are 3097.70, 3105.27 and 3112.76
  • Key levels for eMini futures: break above 3090.50, the high of 7:00 PM and break below 3076.75, the low of 12:00 AM

Pre-Open

  • On Thursday, at 4:00 PM, S&P future closed at 3084.50 and the index closed at 3085.18 – a spread of about -0.75 points; futures closed at 3086.00 for the day; the fair value is -1.50
  • Pre-NYSE session open, futures are higher – at 7:00 AM, S&P 500 futures were up by +1.00; Dow down by +27 and NASDAQ by +1.50

Markets Around The World

  • Markets in the East closed mostly lower – Tokyo was up
  • European markets are lower
  • Currencies:
    Up Down
    • Dollar index
    • USD/JPY
    • USD/CHF
    • USD/CAD
    • INR/USD
    • EUR/USD
    • GBP/USD
    • AUD/USD
    • NZD/USD
  • Commodities:
    Up Down
    • NatGas
    • Cocoa
    • Crude Oil
    • Gold
    • Silver
    • Copper
    • Palladium
    • Platinum
    • Sugar
    • Cotton
    • Coffee
  • Bonds
    • 10-yrs yield closed at 1.926%, up from November 6 close of 1.814%;
    • 30-years is at 2.403%, up from 2.297%
    • 2-years yield is at 1.673%, up from 1.613%
    • The 10-Year-&-2-Year spread is at 0.253 up from 0.201
  • VIX
    • Is at 12.84 up from November 7 close of 12.73; at/above 5-day SMA
    • 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 with small upper and smaller lower shadow; gapped up at the open but then declined after 12:00 PM
    • %K is crisscrossing %D above 80
    • RSI-9 is below 8-day SMA
  • Broke above a symmetrical triangle, that resembles an ascending triangle, on October 25;
    • Upper bound 3027.98 and lower bound 2898.07; max height almost 130; break point is 3016.00; the 61.8% extension target near 3096.00 is achieved; the 100% extension target is near 3146.00;
  • Above 20-day EMA, 50-day EMA, 100-day SMA and 200-day SMA;
  • Uptrend
2-Hour (e-mini future)
  • Drifting mostly sideways to up since 8:00 AM on Monday within a 30 point band; bias changed from down to up on Thursday; uptrend since October 9
    • RSI-21 dropped near 50 from near 70 on Thursday
    • %K is crossing above %D
  • At/above 20-bar EMA, which is above EMA10 of EMA50
  • Bias: Up-Side
30-Minute (e-mini future)
  • Moving sideways to up since 5:00 AM on Monday
    • RSI-21 moving between 40 and 65
    • %K crossed above %D at 4:30 AM from above 60
    • At/above EMA10 of EMA50, which is at/above 20-bar EMA
  • Bias: Up-Side-Up
15-Minute (e-mini future)
  • Bollinger Band (20, 2.0) is drifting down since 3:30 PM
  • The Bollinger Band was narrow from 12:30 AM to 2:30 AM; expanding since with price walking up the upper band
  • Stochastic (9, 1, 3): %K is above %D
  • Bias: Side-Up-Side

Previous Session

Major U.S. indices closed higher on Thursday, November 7 in mixed volume. NASDAQ Composite and Russell 2000 traded in lower volume. Most indices made a doji pattern with longer upper shadow and shorter lower shadow. The indices gapped up at the open but the mostly declined in the afternoon.

From Briefing.com:

The stock market rallied to new highs on Thursday after China’s Commerce Ministry said it reached an agreement with the U.S. for both sides to phase out tariffs. News of internal strife within the White House about those plans, however, curbed some enthusiasm in the market. The S&P 500 finished near its lows but still added 0.3% to close at a record high.

The Nasdaq Composite (+0.3%) and Russell 2000 (+0.3%) also closed near lows with 0.3% gains. The Dow Jones Industrial Average (+0.7%) outperformed and closed at a record high.

[…]

The market has been optimistic, though, and investors still leaned on the side of risk, evident by the outperformance of the cyclical sectors and the sell-off in the U.S. Treasury market. The S&P 500 energy sector (+1.6%) outperformed alongside higher oil prices ($57.11, +0.76, +1.4%), followed by the communication services (+0.7%), information technology (+0.7%), and financials (+0.7%) sectors.

The 2-yr yield rose seven basis points to 1.67%, and the 10-yr yield rose 11 basis points to 1.93%. The U.S. Dollar Index increased 0.2% to 98.13.

[…]

This curve-steepening activity benefited the financials sector, but the higher yields undercut buying interest in the rate-sensitive utilities (-1.4%) and real estate (-1.1%) sectors. The consumer discretionary (-0.6%) and consumer staples (-0.4%) sectors were the other two sectors that finished lower.

The trade-sensitive Philadelphia Semiconductor Index increased 0.7%, although it was up as much as 1.8% in the session. The group still outperformed, though, largely due to the positive reaction to Qualcomm’s (QCOM 89.98, +5.35, +6.3%) better-than-expected quarterly results.

[…]

• Initial jobless claims for the week ending November 2 decreased by 8,000 to 211,000 (Briefing.com consensus 217,000). Continuing jobless claims for the week ending October 26 decreased by 3,000 to 1.689 million.
o The key takeaway from the report is that it is consistent with a job market that remains on solid footing, which will keep recession concerns at bay.
• The Consumer Credit report for September showed an increase of $9.5 billion (Briefing.com consensus $14.0 billion), and August credit growth was unrevised at $17.9 billion.

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