Market Remarks

Morning Notes – Friday, November 4, 2022

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are higher at 9:15 AM; moving up following the Non-Farm Payroll report and after declining more than 40 points to 3713.50;
  • The odds are for an up day with elevated volatility – watch for a break below 374925 for a change of sentiments
  • 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 3782.50, the high at 1:30 AM on November 3, and a break below 3749.25, the low of 8:45 AM

Pre-Open

  • On Thursday at 4:00 PM, S&P futures (December 2022) closed at 3726.25, and the index closed at 3719.89 – a spread of about +7.25 points; the futures closed at 3727.75; the fair value is -1.50
  • Pre-NYSE session open, futures are higher – at 8:15 AM, S&P 500 futures were up by +25.50, Dow by +184, and NASDAQ by +70.25

Markets Around The World

  • Markets in the East closed mostly higher – Hong Kong closed lower
  • European markets are higher
  • Currencies (Compared to two weeks ago):
Up Down
  • USD/CHF
  • AUD/USD
  • NZD/USD
  • Dollar index
  • EUR/USD
  • GBP/USD
  • USD/JPY
  • USD/CAD
  • INR/USD
  • Commodities (Compared to two weeks ago):
    • Energy futures are higher
    • 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 4.124%, down -10.2 basis points from two weeks ago;
    • The 30-year is at 4.152%, down -6.4 basis points;
    • The 2-year yield is at 4.729%, up +11.9 basis points;
    • The 10-Year-&-2-Year spread is at -0.603, down from -0.384
    • The 30-Year-&-10-Year spread is at 0.028, up from -0.010a
  • VIX
    • At 24.92 @ 9:00 AM; down from the last close; below the 5-day SMA;
    • Recent high = 34.88 on September 28; low = 22.64 on September 9
    • Sentiment: Risk-On

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 Divergence 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 Thursday, November 3, in lower volume. Dow Jones Transportation Average closed higher.

Most major indices gapped down at the open. Some closed the gap, and some did not. After the initial decline, the market bounced up and then traded sideways until the last half hour of trading, when it declined slightly. Indices made either Spinning Top or Doji candles.

From Briefing.com:

[…]

Shortly after the open, the Dow, Nasdaq, and S&P 500 were down 1.2%, 1.9%, and 1.6%, respectively. The major averages recovered from those levels as Treasury yields pulled back from overnight highs and the S&P 500 found support at the 3,700 level. The market took another leg lower ahead of the close, weighed down by lagging mega cap stocks.

[…]

The 2-yr note yield settled the session at 4.72% and the 10-yr note yield settled at 4.12%.

[…]

Roughly half of the 11 S&P 500 sectors closed in the red. Information technology (-3.0%) was buried in last place while energy (+2.0%) sat atop the leaderboard.

[…]
  • Weekly Initial Claims 217K (Briefing.com consensus 222K); Prior was revised to 218K from 217K; Weekly Continuing Claims 1.485 mln; Prior 1.438 mln
  • […]
  • September Trade Balance -$73.3 bln (Briefing.com consensus -$71.0 bln); Prior was revised to -$65.7 bkn from -$67.4 bln
  • […]
  • Q3 Productivity-Prel 0.3% (Briefing.com consensus 0.5%); Prior -4.1%; Q3 Unit Labor Costs-Prel 3.5% (Briefing.com consensus 4.2%); Prior was revised to 8.9% from 10.2%
  • […]
  • October IHS Markit Services PMI – Final 47.8; Prior 46.6
  • September Factory Orders 0.3% (Briefing.com consensus 0.3%); Prior was revised to 0.2% from 0.0%
[…]

Dow Jones Industrial Average: -11.9% YTD
S&P Midcap 400: -16.7% YTD
S&P 500: -22.0% YTD
Russell 2000: -20.7% YTD
Nasdaq Composite: -33.9% YTD

Overseas: 

  • Europe: DAX -1.0%6 FTSE +0.6%, CAC -0.5%
  • Asia: Nikkei market closed, Hang Seng -3.1%, Shanghai -0.2%

Commodities: 

  • Crude Oil -1.72 @ 88.07
  • Nat Gas -0.24 @ 6.31
  • Gold -33.60 @ 1631.40
  • Silver -0.39 @ 19.47
  • Copper -0.05 @ 3.42
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