Morning Notes – Tuesday November 6, 2018

/ November 6, 2018

Directional Bias For The Day:

  • S&P Futures are lower; moving sideways to lower since 2:00 Pm on Monday
  • Made a double top on 30-minute chart; broke below the intermediate low; 200% extension target near 2730 is achieved
  • Odds are for a sideways day with choppiness and elevated volatility – watch for break above 2738.50 and break below 2729.75 for clarity
  • No Key economic data due:

Markets Around The World

  • Markets in the East closed mostly higher – Shanghai was down; Singapore was closed
  • European markets are lower
  • Currencies:
    Up Down
    • Dollar index
    • EUR/USD
    • GBP/USD
    • AUD/USD
    • NZD/USD
    • USD/CAD
    • USD/INR
    • USD/JPY
    • USD/CHF
  • Commodities:
    Up Down
    • Gold
    • Silver
    • Copper
    • Platinum
    • Sugar
    • Cocoa
    • Crude Oil
    • NatGas
    • Palladium
    • Coffee
    • Cotton
  • Bonds
    • 10-yrs yield is at 3.200%, down from November 5 close of 3.201%;
    • 30-years is at 3.424%, down from 3.432%
    • 2-years yield is at 2.899%, down from 2.919%
    • The 10-Year-&-2-Year spread is at 0.301, down from 0.290

Key Levels:

  • Critical support levels for S&P 500 are 2724.98, 2717.94 and 2704.91
  • Critical resistance levels for S&P 500 are 2744.27, 2756.55 and 2766.48
  • Key levels for eMini futures: break above 2738.50, the high of 4:00 AM and break below 2729.75, the low of 5:00 AM

Pre-Open

  • On Monday, at 4:00 PM, S&P future (December contract) closed at 2738.00 and the index closed at 2738.31 – a spread of about +0.25 points; futures closed at 2739.50 for the day; the fair value is -1.50
  • Pre-NYSE session open, futures price action is to the downside – at 7:15 AM, S&P 500 futures were down by -6.25; Dow by -58; and NASDAQ by -22.50

Directional Bias Before Open

  • Weekly: In Correction
  • Daily: In Correction
  • 120-Min: Up-Side
  • 30-Min: Side
  • 15-Min: Side
  • 6-Min: Side-Down

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

Monthly
  • Under Pressure
  • October 2018 closed sharply lower; broke below previous four months’ lows; only third down month since October 2016
  • Uptrend resumption since Feb 08, 2016 after a pull back of -15.2% – continues; higher highs and higher lows
Weekly:
  • The week ending on November 2 was a green harami candle within a large red candle with larger lower shadow – almost twice the size of  the real body and the upper shadow – that broke below previous week’s lows
    • Stochastics (9,1, 3) and RSI (14) turning up – %K crossed above %D from below 10 and RSI turned up from 36.35
    • In previous week, Stochastics reached the lowest since the week of October 31, 2016 and RSI the lowest since the week on Jan 11, 2016
  • Last week’s pivot point=2694.38, R1=2785.23 R2=2847.39; S1=2632.22, S2=2541.37; R1 pivot levels was breached;
  • First down week in a row; fourth in last five weeks and fifth in last ten weeks
  • Broke above an ascending triangle but retraced back to its upper limit; 100% extension target is near 3070.00 level; retraced back to the lower trend line of triangle
  • Broke above a down sloping flag on April 24 2017;
    • flag-low was 2322.25 during 27-Mar-17 week; shorter flag-pole length is 317.19 and longer flag-pole length is 590.88;
    • 100% extension target of shorter flag-pole near 2639.44 and the 161.8% extension target near 2835.46 are achieved; the 261.8% extension target is near 3013.72
    • 61.8% extension target of longer flag-pole near 2687.41 is achieved; the 100% extension target near 2913.13 is achieved; the 161.8% extension target is near 3138.85
  • Broke above a down-sloping flag on November 14, 2016;
    • the flag low was 2083.79 during 31-Oct-16 week; the shorter flag-pole length is 202.13 and the longer flag-pole length is 383.71;
    • 261.8% extension target of shorter flag-pole near 2612.97 is achieved
    • the 161.8% extension target of longer flag-pole near 2704.63 is achieved; the 261.8% extension target is near 3088.34
  • Last swing low, 2532.69, was the low on February 5, 2018; Last swing high, 2940.91, was during the week of September 17, 2018;
  • Below 10-week EMA and 39-week SMA; above 89-week SMA
  • Uptrend Under Pressure
Daily
  • A green harami candle, showing indecision
    • %K is above %D after making a bullish divergence on October 23, 2018 and another on October 29
    • Lower highs and lower lows since October 3
  • Below 20-day EMA, 50-day EMA, 100-day SMA and 200-day SMA
  • In Correction
2-Hour (e-mini future)
  • Again rising after declining to the broken downtrend line from the high on October 3 and from EMA50; broken the sequence of lower highs and lower lows; broken above EMA 50;
  • RSI-9 rose from 36.83 at 12:00 PM on November 2 to 68.71 at 6:00 PM on November 5; declined to just below 50 by 4:00 AM
  • At/above 20-bar EMA, which is above EMA10 of EMA50
  • Bias: Up-Side
30-Minute (e-mini future)
  • Moving sideways since 2:00 PM on November 5 between 2745.00 and 2730.00; near the lower bound
  • RSI-9 mostly between 40 and 65 since 2:30 PM on November 2; near the 40 level
  • At/below  20-bar EMA, which is at/above 20-bar EMA; both flat
  • Bias: Side
15-Minute (e-mini future)
  • Bollinger Band (20, 2.0) is mostly moving sideways with up bias since 6:00 PM on November 4
  • The band mostly narrow since 10:45 PM on November 4
  • RSI-9 mostly between 40 and 65 since 2:00 PM on November 2 to 3:00 AM; fell below 40 and now just above it
  • Stochastic (9, 1, 3): %K crossed above %D at 6:00 AM
  • Bias: Side

Previous Session

Major U.S. indices closed mixed on Monday November 5. The volume was lower from previous day. S&P 500, Dow Jones Industrial Average, NYSE Composite and Wilshire 5000 Total Market Index closed up. NASDAQ Composite, Russell 2000 and Dow Jones Transportation Average closed down. Most made candlestick lines – like harami or doji – that show indecision. DJIA made a bullish engulfing candle and NYSE Composite also made a candle that shows bullishness.

From Briefing.com:

The S&P 500 gained 0.6% on a subdued Monday, as investors remained cautious ahead the U.S. congressional midterms elections on Tuesday.

[…]

Meanwhile, the tech-sensitive Nasdaq Composite lost 0.4%, though finished well off its session lows, the Dow Jones Industrial Average gained 0.8%, and the Russell 2000 was unchanged.

[…]

The ISM Non-Manufacturing Index for October checked in at 60.3%

[…]

The key takeaway from the report is that business activity in the non-manufacturing sector is still strong, as the October deceleration can be interpreted at this juncture as a natural slowing following some solid acceleration since July when the index registered 55.7%.

  • S&P 500 Sectors
Sector Daily Trend (Visual) Relative Strength (Last Month – October) Relative Strength (Current) %K vs. %D
Consumer Discretionary Down SPY SPY Below
Consumer Staples Under Pressure XLP XLP Above
Energy Down SPY SPY Below
Materials Down XLB XLB Cross – Over
Industrials Down SPY SPY Below
Finance Down XLF XLF Cross – Over
Technology Down SPY SPY Below
Utility Under Pressure XLU XLU Above
Heath Care Under Pressure SPY XLV Below
Real Estate Down (Turning Up) XLRE XLRE Below
Telecom Down SPY XTL Below

 

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