Morning Notes – Wednesday November 7, 2018

/ November 7, 2018

Directional Bias For The Day:

  • S&P Futures are higher; moved lower from as high of 2787.00 at 5:00 AM
  • Odds are for an up day with elevated volatility – watch for break below 2772.00 for change of fortune
  • Key economic data due:
    • Consumer Credit (est. 15.7B, prev. 20.1B) at 3:00 PM

Markets Around The World

  • Markets in the East closed mostly higher – Shanghai, Tokyo and Seoul were down
  • European markets are higher
  • Currencies:
    Up Down
    • EUR/USD
    • GBP/USD
    • AUD/USD
    • NZD/USD
    • USD/INR
    • Dollar index
    • USD/JPY
    • USD/CHF
    • USD/CAD
  • Commodities:
    Up Down
    • Crude Oil
    • Gold
    • Silver
    • Copper
    • Platinum
    • Palladium
    • Sugar
    • Coffee
    • Cotton
    • NatGas
    • Cocoa
  • Bonds
    • 10-yrs yield closed at 3.214%, up from November 5 close of 3.201%;
    • 30-years is at 3.426%, down from 3.432%
    • 2-years yield is at 2.930%, up from 2.919%
    • The 10-Year-&-2-Year spread is at 0.282, down from 0.290

Key Levels:

  • Critical support levels for S&P 500 are 2739.14, 2724.98 and 2717.94
  • Critical resistance levels for S&P 500 are 2778.94, 2797.77 and 2816.21
  • Key levels for eMini futures: break above 2787.00, the high of 5:00 AM and break below 2772.25, the low of 3:30 AM

Pre-Open

  • On Tuesday, at 4:00 PM, S&P future (December contract) closed at 2754.50 and the index closed at 2755.45 – a spread of about +1.00 points; futures closed at 2759.00 for the day; the fair value is -4.50
  • Pre-NYSE session open, futures price action is to the upside – at 8:30 AM, S&P 500 futures were up by +20.00; Dow by +160; and NASDAQ by +69.75

Directional Bias Before Open

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

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 candle that open above the close of previous day’s harami candle and then close above the high since October 23 and in the process broke above a five-day consolidation phase
    • %K is above %D; approaching 100
    • Still lower highs and lower lows since October 3; need to move above October 17 high of 2816.94 to break the sequence
  • Above 20-day EMA; below 50-day EMA, 100-day SMA and 200-day SMA
  • In Correction
2-Hour (e-mini future)
  • Above an uptrend line from October 29 lows; higher highs and higher lows
  • RSI-9 rising – after making a low of 10.69 at 10:00 AM on October 23 – in steps; above 75
  • Above 20-bar EMA, which is above EMA10 of EMA50
  • Bias: Up
30-Minute (e-mini future)
  • Moving higher since 1:00 PM on November 2 after a brief retracement
  • RSI-9 mostly above 50 since 2:30 PM on November 2; above 60
  • Above 20-bar EMA, which is above 20-bar EMA; both rising
  • Bias: Up
15-Minute (e-mini future)
  • Bollinger Band (20, 2.0) is moving up
  • The band narrow briefly from 00:45 AM to 3:00 AM; expanding since; price moved along the upper band till 5:00 AM and pulling back to mid-point
  • RSI-9 mostly above 40 since 7:00 AM on November 6; declining from above 75 to just below 60
  • Stochastic (9, 1, 3): %K crisscrossed below %D from above 95 at 5:00 AM to below 20 at 6:30 AM; rising since
  • Bias: Up

Previous Session

Major U.S. indices closed higher on Tuesday November 6. The volume was mostly lower from previous day. Dow Jones Transportation Average trade in higher volume. Indices open higher and remained higher with a brief retracement. Most have either broken above or trying to break above past few day’s congestion area. NASDAQ Composite is the laggard.

From Briefing.com:

The S&P 500 added 0.6% for a second consecutive day on Tuesday, as investors awaited results from the U.S. congressional midterm elections. It was a largely broad-based performance, as all 11 S&P sectors finished in positive territory.

Also, the Nasdaq Composite gained 0.6%, the Dow Jones Industrial Average gained 0.7%, and the Russell 2000 gained 0.6%.

[…]

In the bond market, U.S. Treasury yields inched higher with the 2-yr yield adding two basis points to 2.92% and the 10-yr yield increasing one basis point to 3.21%. Yields have been gradually re-ascending to multi-year highs after declining at the end of October. Also, the U.S. Dollar Index remained unchanged at 96.30.

In Europe, the major indices closed on a lower note with the Euro STOXX 50 losing 0.3%. UK’s FTSE led the decline with a loss of 0.9%.

  • 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 Cross – Over
Telecom Down SPY SPY Below

 

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