Morning Notes – Tuesday October 9, 2018

Directional Bias For The Day:

• S&P Futures are lower; declined from 4:00 PM high of 2894.00 to 7:30 AM low of 2874.50; rising since to 2885.00
• At/Below a down trendline
• Break above 2894.00 is critical
• Odds are for a volatile with real chance of turning around; if the bounce fails then there is an increased chance of decline to near 2850.00 level
• Watch for break above 2887.00 and below 2874.50 for more clarity
• No key economic data due:

Markets Around The World

• Markets in the East closed mostly down – Shanghai was up; Seoul was closed
• European markets are mostly down – Italy is up
• Currencies:
  

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

• Commodities:
  

  Up	Down
  Crude Oil NatGas Gold Silver Platinum (Unch.) Coffee Cocoa	Copper Palladium Sugar Cotton

• Bonds
  • 10-yrs yield is at 3.237%, up from October 8 close of 3.233%;
  • 30-years is at 3.410%, up from 3.405%
  • 2-years yield is at 2.885%, down from 2.889%
  • The 10-Year-&-2-Year spread is at 0.352, up from 0.344

Key Levels:

• Critical support levels for S&P 500 are 2862.08, 2854.03 and 2833.73
• Critical resistance levels for S&P 500 are 2889.45, 2893.70 and 2903.04
• Key levels for eMini futures: break above 2887.00, the high of 5:00 AM and break below 2874.50, the low of 7:30 AM

Pre-Open

• On Monday, at 4:00 PM, S&P future (December contract) closed at 2889.75 and the index closed at 2884.43 – a spread of about +5.25 points; futures closed at 2893.75 for the day; the fair value is -4.00
• Pre-NYSE session open, futures price action is to the downside – at 8:45 AM, S&P 500 futures were down -12.00; Dow by -104.00; and NASDAQ by -27.00

Directional Bias Before Open

• Weekly: Uptrend Under Pressure
• Daily: Uptrend Under Pressure
• 120-Min: Down
• 30-Min: Down
• 15-Min: Down
• 6-Min: Down-Side

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

Previous Session

Major U.S. indices closed mostly lower on Monday October 8 in mostly lower volume. Dow Jones Industrial Average and NYSE Composite advanced and DJIA traded in higher volume. The market declined for most of the day and then turned around in the last half-hour of trading.

From Briefing.com for last week:

The stock market fell on Friday as bond yields continued to climb following the release of the Employment Situation report for September. The S&P 500 and the Dow lost 0.6% and 0.7%, respectively. The tech-heavy Nasdaq dropped 1.2%.[ …]

The key takeaway from the report [Non-Farm Payroll] is that the labor market is solid and still simmering with the prospect of pent-up wage pressures being unleashed at any point as employers encounter difficulty in finding qualified workers. […]

The key takeaway from the report [August Trade Balance] is that it has yet to confirm the tariff actions are succeeding in cutting the trade deficit in a big way; moreover, with the third quarter real average trade deficit 8.9% higher than the second quarter average, trade will be accounted for as a negative input in Q3 GDP forecasts. […]

The key takeaway from the report [Consumer Credit Report] is that it reflects a pickup in credit demand that should be construed as an offshoot of a strengthening economy led by a solid labor market.

For the week:

• S&P 500 Sectors