Market Remarks

Morning Notes – Wednesday, November 2, 2022

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are lower at 9:15 AM; moving within a Horizontal Channel between 3881.25 and 3852.50 since 10:15 AM on Tuesday
  • The odds are for a sideways to down day at least until the afternoon and before the FOMC statement and press conference – watch for a break above 3881.25 and below 3852.50 for clarity
  • The key economic data report is due during the day:
    • ADP Non-Farm Employment Change ( 239K vs. 178K est.; prev. 192K) at 8:15 AM
    • FOMC Statement at 2:00 PM
    • Fed Funds Rate ( 4.00% est.; prev. 3.25%) at 2:00 PM
    • FOMC Press Conference at 2:30 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 3843.80, 3819.74, and 3803.79
  • Critical resistance levels for S&P 500 are 3867.80, 3892.24, and 3911.79
  • Key levels for E-mini futures: break above 3881.25, the high at 4:30 AM, and a break below 3852.50, the low of 11:30 PM

Pre-Open

  • On Tuesday at 4:00 PM, S&P futures (December 2022) closed at 3865.00, and the index closed at 3856.10 – a spread of about +9.00 points; the futures closed at 3866.00; the fair value is -1.00
  • Pre-NYSE session open, futures are lower  – at 9:00 AM, S&P 500 futures were down by -4.50, Dow by -70, and NASDAQ up by +0.25

Markets Around The World

  • Markets in the East closed mostly higher – Tokyo ad Mumbai closed lower
  • European markets are mostly lower – Italy and Switzerland are higher
  • Currencies (Compared to two weeks ago):
Up Down
  • EUR/USD
  • GBP/USD
  • USD/CHF
  • AUD/USD
  • NZD/USD
  • INR/USD
  • Dollar index
  • USD/JPY
  • USD/CAD
  • Commodities (Compared to two weeks ago):
    • Energy futures are mixed
    • Precious metals are mixed
    • Industrial metals are mostly higher
    • Soft commodities are mixed
  • Treasuries (Compared to two weeks ago)
    • The 10-year yield closed at 4.038%, up +4.0 basis points from two weeks ago;
    • The 30-year is at 4.095%, up +7.4 basis points;
    • The 2-year yield is at 4.491%, up +4.7 basis points;
    • The 10-Year-&-2-Year spread is at -0.453, down from -0.446
    • The 30-Year-&-10-Year spread is at 0.057, up from 0.023
  • VIX
    • At 26.33 @ 8:15 AM; up from the last close; at/above the 5-day SMA;
    • Recent high = 34.88 on September 28; low = 22.64 on September 9
    • Sentiment: Risk-Neutral-Off

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

Weekly:
  • The week ending on October 28 was a green candle with almost no upper and lower shadows following a three-week Morning Star; bouncing up from just below the support level around the low of June 13 week
    • Stochastic (9,1, 3): %K is above %D;
    • RSI-9 is near 50
  • The week was up +148.31 or +4.0%; the 5-week ATR  is 187.56
  • An up week; third in the last five weeks, and fourth in the previous ten weeks;
  • The weekly pivot point=3849.38, R1=3957.10, R2=4013.15; S1=3793.33, S2=3685.61; R1/R2 pivot levels were breached
  • Above 10-week EMA; below 39-week SMA, and 89-week SMA
  • Uptrend Resumed
Daily
  • A Bearish Engulfing candle with small upper and lower shadows at the 100-D DMA;
    • Stochastic (9, 1, 3): %K crossed below %D with potential Bearish Divergence
    • RSI-9 turned down to below 60; below 8-day EMA;
  • Above 20-day EMA and 50-day EMA; at/below 100-day SMA; below 200-day SMA;
  • Confirmed Uptrend
2-Hour (E-mini futures)
  • Moving up, making higher highs and higher lows since October 13; broke below the last higher low made on October 31; broke above a Horizontal Channel between 3820.00 and 3570.00 – the 61.8% target is near 4004.36, and a 100% extension target is near 4119.25
      • RSI-21 has declined to 30 from nearly 80 and after making a Bearish Divergecen at 6:00 AM on Tuesday
      • Below EMA20, which is at/above EMA10 of EMA50
  • Bias: Up
30-Minute (E-mini futures)
  • Near the lower bound of a horizontal channel between 388.25 and 3852.59 since 9:30 AM o Tuesday – a break below will have a 61.8% extension target around 3834.00 and a 100% extension target around 3823.00
    • RSI-21 is below 35
    • Below EMA20, which is below EMA10 of EMA50
  • Bias: Side
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) has been drifting up since 3:15 PM, forming an upsloping flag.
  • The Bollinger Band is expanded a bit since 4:00 AM with price walking down the lower band.
  • Bias:  Side

Previous Session

Major U.S. indices closed mostly lower on Tuesday, November 1, in mostly lower volume. Russell 200 and NYSE Composite Index closed higher. Russell 2000 traded in higher volume.

Most major indices made Bearish Engulfing candles.

From Briefing.com:

[…]

The stock market kicked off November on an upbeat note. The S&P 500, Dow, and Nasdaq were up 1.0%, 1.5%, and 0.7%, respectively, at this morning’s highs.

[…]

The market quickly shifted to retreat mode, though,

[…]

The 10-yr Treasury note yield, which was below 4.00% while stocks rallied, settled at 4.05%. The 2-yr note yield, at 4.43% earlier, settled at 4.51%.

[…]

After dealing with the initial retreat, the stock market reverted to wait-and-see mode and stuck to a fairly narrow trading range for the remainder of the session.

[…]

Notably, small and mid cap stocks fared better than their larger peers today. The Russell 2000 (+0.3%) and S&P Mid Cap 400 (+0.4%) sported a modest gain while the three main indices closed below the flat line.

[…]

Roughly half of the 11 S&P 500 sectors suffered a loss today with communication services (-1.3%) buried in last place. Meanwhile, energy (+1.1%) sat atop the leaderboard

[…]
  • The October ISM Manufacturing Index dropped to 50.2% (Briefing.com consensus 50.0%) from 50.9% in September. A number above 50.0% is indicative of expansion, yet the lower reading versus September points to a deceleration in overall manufacturing activity. October marked the 29th consecutive month of expansion in the manufacturing sector, yet it was the lowest reading since May 2020.
  • […]
  • Total construction spending increased 0.2% month-over-month in September (Briefing.com consensus -0.5%) following an upwardly revised 0.6% decline (from -0.7%) in August. Total private construction was up 0.4% month-over-month while total public construction spending was down 0.4%. On a year-over-year basis, total construction spending was up 10.9%.
  • […]
  • JOLTS Job openings totaled 10.717 million in September from the prior revised total of 10.280 million (from 10.053 million).

Dow Jones Industrial Average: -10.1% YTD
S&P Midcap 400: -14.1% YTD
S&P 500: -19.1% YTD
Russell 2000: -17.5% YTD
Nasdaq Composite: -30.4% YTD

Overseas: 

  • Europe: DAX +0.%6, FTSE +1.3%, CAC +1.0%
  • Asia: Nikkei +0.3%, Hang Seng +5.2%, Shanghai +2.6%

Commodities: 

  • Crude Oil +1.90 @ 88.40
  • Nat Gas -0.46 @ 6.13
  • Gold +13.90 @ 1652.70
  • Silver +0.56 @ 19.71
  • Copper +0.09 @ 3.46
Exit mobile version