Morning Notes – Thursday October 11, 2018

Directional Bias For The Day:

• S&P Futures are sharply lower; moving higher since 5:00 AM after making a low of 2747.25 below earlier low of 2748.50; nearly 30 points above the day’s low so far
• Odds are for a down day with a good chance of a dead-cat-bounce; increased volatility
• Key economic data due:
  • CPI ( 0.1% vs. 0.2% est.) at 8:30 AM
  • Core CPI ( 0.1% vs. 0.2% est.) at 8:30 AM
  • Unemployment Claims (214K vs. 207K est.) at 8:30 AM

Markets Around The World

• Markets in the East closed lower
• European markets are down
• Currencies:
  

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

• Commodities:
  

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

• Bonds
  • 10-yrs yield is at 3.191%, down from October 10 close of 3.225%;
  • 30-years is at 3.372%, down from 3.398%
  • 2-years yield is at 2.853%, up from 2.849%
  • The 10-Year-&-2-Year spread is at 0.327, down from 0.376

Key Levels:

• Critical support levels for S&P 500 are 2770.77, 2755.16 and 2733.52
• Critical resistance levels for S&P 500 are 2794.73, 2816.44 and 2823.84
• Key levels for eMini futures: break above 2785.50, the high of 7:00 PM on October 10 and break below 2756.25, the low of 7:30 AM on Tuesday

Pre-Open

• On Wednesday, at 4:00 PM, S&P future (December contract) closed at 2792.50 and the index closed at 2785.68 – a spread of about +6.75 points; futures closed at 2781.00 for the day; the fair value is +11.50
• Pre-NYSE session open, futures price action is to the downside – at 8:15 AM, S&P 500 futures were down -10.50; Dow by -130.00; and NASDAQ by -26.25

Directional Bias Before Open

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

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

Previous Session

Major U.S. indices closed sharply lower on Wednesday October 9 in increased volume. The market suffered the biggest loss since early February 2018.

From Briefing.com:

Stocks tumbled on Wednesday as bond yields held steady at multi-year highs and amid continued concerns about economic and earnings growth prospects. The S&P 500 lost 3.3%, extending its losing streak to five sessions in a row, which is its longest losing streak since 2016. The Dow Jones Industrial Average and the Nasdaq Composite also fell sharply, losing 3.2% and 4.1%, respectively. […]

However, the selling didn’t feel fast and panicky; rather, it was somewhat orderly in nature, which underscores the idea that it was largely a risk-reduction effort, whereby market participants are cutting their exposure to stocks, cognizant that earnings growth estimates are at risk with rising interest rates, tariff actions, and higher costs.

Other key technical breaches included the Dow falling below its 50-day moving average, the Nasdaq falling below its 200-day moving average, and the Russell 2000 falling below its 200-day moving average.[…]

Information technology was the worst-performing S&P sector on Wednesday, tumbling 4.8%, but growth-sensitive, cyclical groups underperformed on the whole, with financials, consumer discretionary, industrials, energy, and communications services all losing between 3.0% and 3.9% apiece.[…]

Interestingly, the equity sell off did not lead to higher demand for “risk-free” U.S. Treasuries. In fact, bonds declined with stocks on Wednesday, with investors presumably opting to go to cash instead.

• S&P 500 Sectors