Market Remarks

Morning Notes – Tuesday, November 1, 2022

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are higher at 9:00 AM; moving up since e3:00 PM on Monday;
  • The odds are for an up day with elevated volatility – watch for a break below 3907.25 for a change of sentiments
  • The key economic data report is due during the day:
    • Final Manufacturing PMI ( 49.9 est.; prev. 49.9) at 9:45 AM
    • ISM Manufacturing PMI ( 50.0 est.; prev. 50.9) at 10:00 AM
    • JOLTS Job Openings ( 9.75M est.; prev. 10.05M) at 10:00 AM
    • Construction Spending ( -0.5% est; prev. -0.7% ) at 10:00 AM
    • ISM Manufacturing Prices ( 53.0 est.; prev. 51.7) at 10:00 AM

Directional Bias Before Open:

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

Key Levels:

  • Critical support levels for S&P 500 are 3905.42, 3893.73, and 3863.18
  • Critical resistance levels for S&P 500 are 3928.76, 3945.12, and 3959.14
  • Key levels for E-mini futures: break above 3928.00, the high at 8:30 AM, and a break below 3907.25, the low of 5:00 AM

Pre-Open

  • On Monday at 4:00 PM, S&P futures (December 2022) closed at 3882.75, and the index closed at 3871.98 – a spread of about +10.5 points; the futures closed at 3883.00; the fair value is -0.25
  • Pre-NYSE session open, futures are higher – at 9:00 AM, S&P 500 futures were up by +39.75, Dow by +210, and NASDAQ by +151.00

Markets Around The World

  • Markets in the East closed higher
  • European markets are higher
  • Currencies (Compared to two weeks ago):
Up Down
  • EUR/USD
  • GBP/USD
  • USD/CHF
  • AUD/USD
  • NZD/USD
  • INR/USD
  • Dollar index
  • USD/JPY
  • USD/CAD
  • Commodities (Compared to two weeks ago):
    • Energy futures are higher
    • Precious metals are mixed
    • Industrial metals are mostly lower
    • Soft commodities are mostly lower
  • Treasuries (Compared to two weeks ago)
    • The 10-year yield closed at 3.930%, down -8.5 basis points from two weeks ago;
    • The 30-year is at 4.060%, up +4.5 basis points;
    • The 2-year yield is at 4.486%, up +3.4 basis points;
    • The 10-Year-&-2-Year spread is at -0.551, down from -0.437
    • The 30-Year-&-10-Year spread is at 0.128, up from 0.000
  • VIX
    • At 25.74 @ 8:30 AM; up from the last close; below the 5-day SMA;
    • Recent high = 34.88 on September 28; low = 22.64 on September 9
    • Sentiment: Risk-On

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

Weekly:
  • The week ending on October 28 was a green candle with almost no upper and lower shadows following a three-week Morning Star; bouncing up from just below the support level around the low of June 13 week
    • Stochastic (9,1, 3): %K is above %D;
    • RSI-9 is near 50
  • The week was up +148.31 or +4.0%; the 5-week ATR  is 187.56
  • An up week; third in the last five weeks, and fourth in the previous ten weeks;
  • The weekly pivot point=3849.38, R1=3957.10, R2=4013.15; S1=3793.33, S2=3685.61; R1/R2 pivot levels were breached
  • Above 10-week EMA; below 39-week SMA, and 89-week SMA
  • Uptrend Resumed
Daily
  • A small Harami Spinning Top candle with small upper and lower shadows;
    • Stochastic (9, 1, 3): %K is above %D but turning down
    • RSI-9 is above 60; above 8-day EMA;
  • Above 20-day EMA and 50-day EMA; at/below 100-day SMA; below 200-day SMA;
  • Confirmed Uptrend
2-Hour (E-mini futures)
  • Resume the move above a Horizontal Channel between 3820.00 and 3570.00 – the 61.8% target is near 4004.36, and a 100% extension target is near 4119.25
      • RSI-21 has bounced up to near 75 from 50
      • Above EMA20, which is above EMA10 of EMA50
  • Bias: Up
30-Minute (E-mini futures)
  • Moving up on the far side of a saucer pattern but at the high
    • RSI-21 is above 65
    • Above EMA20, which is above EMA10 of EMA50
  • Bias: Side-Up
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) has been moving up since 9:00 PM
  • The Bollinger Band is expanded a bit, and the price is near the upper band
  • Bias:  Side-Up

Previous Session

Major U.S. indices closed mostly lower on Monday, October 31, in most lower volume. Dow Jones Transportation Average closed higher in higher volume.

The major indices opened lower and then traded sideways for the rest of the day within a narrow range. Most made a Harami or similar indecisive candles.

From Briefing.com:

[…]

The Dow Jones Industrial Average, the Russell 2000, and the S&P Mid Cap 400 all logged double digit gains this month.

The Dow had its best monthly performance since 1976 with a 14.0% gain.

[…]

On top of that, participants received some economic news that played into some stagflation fears. China’s official manufacturing PMI for October checked in at 49.2 while its non-manufacturing PMI checked in at 48.7. A reading below 50.0 is indicative of contraction. Separately, the eurozone CPI hit a record-high 10.7% year-over-year in October.

[…]

The 2-yr note yield rose seven basis points to 4.49%. The 10-yr note yield settled the session up seven basis points to 4.08%, but hit 4.10% soon after the close of the cash session.

[…]

Broad based selling left ten of the 11 S&P 500 sectors in negative territory. Communication services (-1.7%) and information technology (-1.3%) brought up the rear while energy (+0.6%) sat alone in the green.

[…]

Dow Jones Industrial Average: -9.9% YTD
S&P Midcap 400: -14.4% YTD
S&P 500: -18.8% YTD
Russell 2000: -17.8% YTD
Nasdaq Composite: -29.8% YTD

Overseas: 

  • Europe: DAX +0.1%, FTSE +0.7%, CAC -0.1%
  • Asia: Nikkei +1.8%, Hang Seng -1.2%, Shanghai -0.8%

Commodities: 

  • Crude Oil -1.39 @ 86.50
  • Nat Gas +0.63 @ 6.59
  • Gold -5.90 @ 1633.80
  • Silver -0.00 @ 19.15
  • Copper -0.05 @ 3.37
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