Market Remarks

Morning Notes – Wednesday November 4, 2020

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are higher;
  • The odds are for an up day; the daily bias since October 12 is down; elevated volatility – watch for the break below 3357.00 for change of sentiments
  • Key economic data report:
    • ADP Non-Farm Employment Change ( 365K vs. 650K est.; prev. 753K ) at 8:15 AM
    • Trade Balance ( -64.2B est.; prev. -67.1B) at 8:30 AM
    • Final Services PMI ( 56.0 est.; prev. 56.0) at 9:45 AM
    • ISM Services PMI ( 57.4 est.; prev. 57.8) at 10:00 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 3407.00, 3390.00, and 3356.19
  • Critical resistance levels for S&P 500 are 3441.42, 3465.60, and 3476.93
  • Key levels for E-mini futures: break above 3432.25, the high of 10:15 PM and break below 3357.00, the low of 5:30 AM

Pre-Open

  • On Tuesday at 4:00 PM, S&P futures (December 2020) closed at 3359.25 and the index closed at 3369.02 – a spread of about -9.75 points; futures closed at 3361.50 for the day; the fair value is -2.25
  • Pre-NYSE session open, futures are higher – at 8:00 AM, S&P 500 futures were up by +57.75; Dow by +273, and NASDAQ by +413.75

Markets Around The World

  • Markets in the East closed mostly higher – Hong Kong and Sydney were down
  • European markets are mostly higher – Spain is lower
  • Currencies:
    Up Down
    • EUR/USD
    • AUD/USD
    • USD/CAD
    • Dollar index
    • GBP/USD
    • USD/JPY
    • USD/CHF
    • NZD/USD
    • INR/USD
  • Commodities:
    Up Down
    • Crude Oil
    • Copper
    • Coffee
    • Cotton
    • NatGas
    • Gold
    • Silver
    • Platinum
    • Palladium
    • Sugar
    • Cocoa
  • Bond
    • 10-years yield closed at 0.882%, up from November 2 close of 0.849%;
    • 30-years is at 1.655% up from 1.624%
    • 2-years yield is at 0.168% unchanged
    • The 10-Year-&-2-Year spread is at 0.714 up from 0.681
  • VIX
    • At 31.74 @ 7:30 AM; down -3.81 from the last close; below 5-day SMA;
    • Recent high =  41.16 on October 16; low =  24.03 on October 9
    • Sentiment: Risk-On

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 green candle that gapped up at the opened and closed higher; almost no lower shadow and small upper shadow; downtrend since October 12 in small steps; next support at 3209.45, the low September 24
    • %K is above %D;
    • RSI-9 turning up; just below 50; above 8-day SMA
  • At/below 20-day EMA and 50-day EMA; above 100-day; above 200-day SMA
  • Uptrend Under Pressure
2-Hour (E-mini futures)
  • Moving higher after bouncing off a support zone between 3198.00 and 3235.255 at 2:00 AM on October 30; broke above a Head-&-Shoulder pattern – achieved 61.8% extension target near 3400.00; 100% extension target is near 3440.00 and 161.8% extension target is near 3510.00
    • RSI-21 rising in steps since October 28 afternoon; above 70; made Bullish Divergence October 29 and October 30
  • Above EMA10 of EMA50, which is above EMA20
  • Bias: Side-Up
30-Minute (E-mini futures)
  • Trending higher since 2:30 PM on October 30; near a resistance level around 3410.00 after breaking above it overnight
    • RSI-21 moving down since 10:30 AM on Tuesday from above 70′ below 60; Bearish Divergence at 10:00 PM
    • %K is crossing below %D at 8:00 AM around 90
  • 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 is expanding and volatile since 9:45 Am on Tuesday with price alternatively walking up and down the outer bands;
    • Stochastic (9, 1, 3): %K is crisscrossing %D around 90
  • Bias: Up

Previous Session

Major U.S. indices closed higher on Tuesday, November 3 in mostly higher volume. Dow Jones Industrial Average traded in lower volume. Indices gapped up at the open and maintained the gap for the rest of day and closed higher. All S&P sectors but one – Energy – closed higher.

From Briefing.com:

The S&P 500 advanced 1.8% on Election Day, as investors bought the dip for the second straight day ahead of tonight’s results. The Nasdaq Composite (+1.9%) and Dow Jones Industrial Average (+2.1%) eked out larger gains while the Russell 2000 (+2.9%) legged out the clear advantage.

Ten of the 11 S&P 500 sectors finished in positive territory with each rising more than 1.0%. The industrials (+2.9%), financials (+2.2%), and consumer discretionary (+2.0%) sectors increased at least 2.0%; the energy sector (-0.8%) was the only sector that closed lower despite higher oil prices ($37.62, +0.83, +2.3%).

[…]

The positive price action also contributed to continued selling in longer-dated Treasuries, which steepened the curve in a trade that benefited the financials sector. The 2-yr yield was unchanged at 0.16%, while the 10-yr yield increased three basis points to 0.88% to close at its highest level since June 8. The U.S. Dollar Index fell 0.7% to 93.51.

[…]
  • Factory orders for manufactured goods increased 1.1% m/m in September, as expected, following a downwardly revised 0.6% increase (from 0.7%) in August. This is the fifth straight monthly increase in factory orders.
[…]
  • Nasdaq Composite +24.4% YTD
  • S&P 500 +4.3% YTD
  • Dow Jones Industrial Average -3.7% YTD
  • Russell 2000 -3.3% YTD
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