Market Remarks

Morning Notes – Tuesday November 3, 2020

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are higher;
  • The odds are for an up day; good chance of  sideways to up move from pre-open levels around 3340.00; the daily bias is down; elevated volatility – watch for a break above 3349.75 and break below 3311.00 for clarity
  • Key economic data report:
    • Factory Orders ( 1.0% est.; prev. 0.7% ) at 10:00 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 3330.14, 3310.80, and 3279.74
  • Critical resistance levels for S&P 500 are 3364, 3388.71, and 3409.51
  • Key levels for E-mini futures: break above 3349.75, the high of 4:30 AM and break below 3311.00, the low of 11:30 PM

Pre-Open

  • On Monday at 4:00 PM, S&P futures (December 2020) closed at 3301.75 and the index closed at 3310.24 – a spread of about -9.50 points; futures closed at 3300.50 for the day; the fair value is +1.25
  • Pre-NYSE session open, futures are higher – at 8:45 AM, S&P 500 futures were up by +38.50; Dow by +416, and NASDAQ by +68.00

Markets Around The World

  • Markets in the East closed higher – Tokyo was closed for trading
  • European markets are higher
  • Currencies:
    Up Down
    • EUR/USD
    • GBP/USD
    • USD/JPY
    • AUD/USD
    • NZD/USD
    • Dollar index
    • USD/CHF
    • USD/CAD
    • INR/USD
  • Commodities:
    Up Down
    • Crude Oil
    • Gold
    • Silver
    • Copper
    • Platinum
    • Palladium
    • Sugar
    • Coffee
    • Cotton
    • Cocoa
    • NatGas
  • Bond
    • 10-years yield closed at 0.849%, down from October 30 close of 0.860%;
    • 30-years is at 1.624% down from 1.640%
    • 2-years yield is at 0.168% down from 0.170%
    • The 10-Year-&-2-Year spread is at 0.681 down from 0.690
  • VIX
    • At 35.92 @ 6:30 AM; down -1.21 from the last close; below 5-day SMA;
    • Recent high =  41.16 on October 16; low =  24.03 on October 9
    • Sentiment: Risk-On to Neutral

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

Monthly
  • Uptrend under pressure
  • October 2020 was a red candle with long upper shadow and smaller lower shadows;
    • Stochastic %K is below %D from above 90; potential %D Bearish Divergence
    • RSI-9 below 60 from near 70; below a downtrend line that it broke above briefly in August
    • Retreating from the upper band of a 120-month regression channel;
  • The sequence of higher highs and higher lows is resumed
Weekly:
  • The week ending on October 30 was a large red candle with almost no upper shadow and a small lower shadow
    • Stochastic (9,1, 3): %K is below %D; below 20
    • RSI (9) is below 50
  • The week was down -195.43 or -5.6%; the 5-week ATR is 132.02
  • The weekly week pivot point=3315.11, R1=3396.27, R2=3522.59; S1=3188.79, S2=3107.63; S1/S2/S3 pivot levels were breached
  • A down week; second in the last five weeks and sixth in last ten weeks
  • Below 10-week EMA; above 39-week SMA, and 89-week SMA
  • Uptrend since March 23 Under Pressure
Daily
  • A relatively small green spinning top candle that opened higher; downtrend since October 12 in small steps; next support at 3209.45, the low September 24
    • %K turning up above %D;
    • RSI-9 turning up; just below 40; below 8-day SMA
  • Below 20-day EMA, 50-day EMA; at/below 100-day; above 200-day SMA
  • Uptrend Under Pressure
2-Hour (E-mini futures)
  • Bounced off a support zone between 3198.00 and 3235.255 at 2:00 AM on October 30; breaking above a Head-&-Shoulder pattern – 50% extension target is near 3390.00, 61.8% extension target is near 3400.00 and 100% extension target is near 3440.00
    • RSI-21 rising in steps since October 28 afternoon; above 60; made Bullish Divergence October 29 and October 30
  • Above EMA10 of EMA50, which is above EMA20
  • Bias: Down-Side
30-Minute (E-mini futures)
  • Trending down since 2:00 PM on October 12; bouncing off lows since 2:30 PM on October 30; breaking above a resistance level around 3333.00
    • RSI-21 between 60 and 65
    • %K is below %D since 5:00 AM from near 100
  • Above EMA20; which is above EMA10 of EMA50
  • Bias: Side-Up
15-Minute (E-mini futures)
  • Bollinger Band (20, 2.0) moving up since 3:30 PM on October 30
  • The Bollinger Band narrowed from 10:00 PM to 3:00 AM; expanding since; price walked up the upper bound till 5:30 AM and then drifted to the middle band
    • Stochastic (9, 1, 3): %K is crisscrossing %D lower
  • Bias: Side-Up

Previous Session

Major U.S. indices closed higher on Monday, November 2 in lower volume. Indices opened higher and then traded up and down during the day before closing with an up move. All S&P sectors closed higher.

From Briefing.com:

The S&P 500 advanced 1.2% on Monday in a cyclically-led rebound. The value-oriented Dow Jones Industrial Average (+1.6%) and Russell 2000 (+2.0%) outpaced the benchmark index, while the Nasdaq Composite (+0.4%) underperformed amid relative weakness in the mega-cap/growth stocks. […]

The energy sector rose 3.7% amid a turnaround in crude futures ($36.79, +1.09, +3.1%), which were down 5% from Friday’s settlement price after several European countries announced renewed lockdowns. The materials (+3.4%), industrials (+2.7%), and financials (+1.9%) sectors were other notable gainers.

At the other end, the information technology (+0.3%), consumer discretionary (+0.3%), and communication services (+0.1%) sectors struggled to keep pace due to renewed selling pressure in their mega-cap components, which were also among the weakest performers last week.

[…]

U.S. Treasuries finished mixed and little changed. The 2-yr yield increased one basis point to 0.16%, and the 10-yr yield declined one basis point to 0.85%. The U.S. Dollar Index finished little changed at 94.06.

[…]
  • The ISM Manufacturing Index for October checked in at 59.3% (Briefing.com consensus 55.7%), which is an improvement from 55.4% in September and the highest level since September 2018. The dividing line between expansion and contraction is 50.0%.
[…]
  • Total construction spending increased 0.3% m/m in September (Briefing.com consensus +0.9%) on the heels of a downwardly revised 0.8% increase (from +1.4%) in August. Total private construction spending rose 0.9% m/m and total public construction spending declined 1.7%.
[…]
  • Nasdaq Composite +22.1% YTD
  • S&P 500 +2.5% YTD
  • Dow Jones Industrial Average -5.7% YTD
  • Russell 2000 -6.0% YTD
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