Morning Notes – Friday November 4, 2016

Directional Bias For The Day:

  • S&P 500 eMini Futures 4-NOv-16 8:15 AMThe futures are unchanged but finding resistance at a down trend line on 30-minute timeframe
  • S&P 500 has been down for eight consecutive day; last time it did that was on August 12 1982
  • Odds are for a bounce on law of averages
  • The markets are driven more by U.S. presidential election than anything else

Markets Around The World

  • Markets in the East were down
  • European markets are down after a gap down open; losses are extending
  • Dollar index, USD/JPY and EUR/USD are up; GBP/USD is down
  • Commodities are mixed – copper is up and all others are down

Key Levels:

  • Critical support levels for S&P 500 are 2081.74, 2074.82, and 2068.91
  • Critical resistance levels for S&P 500 are 2094.00, 2102.56, and 2111.76
  • Key levels for eMini futures: break above 2090.00, the 2:00 PM high on November 3, for bulls and break below 2080.50, the low of 5:00 AM, for bears


  • Pre-NYSE session open, futures price action is slightly to the up side; at 8:45 AM, S&P 500 futures were up by +0.50, Dow by -10.00 and NASDAQ by -0.75
  • On Thursday, at 4:00 PM, S&P future (Dec contract) closed at 2083.50 and the index closed at 2088.66 – a spread of about 5.00 points; futures closed at 2083.50 for the day

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

  • Up trend since Feb 08, 2016
  • Current uptrend under pressure; need to rise above 2154.79 to relieve the pressure
  • Up trend since Feb 08, 2016 with one pullback; broke out of a 2-year trading range in July, 2016
  • Last swing low, 1991.68, was reached on June 27, 2016
  • Broke below a small bearish ABCD pattern with a downside target near 2105.30 (100% – met), 2076.77 (138.2%), 2067.96 (150%), 2059.14 (161.8%)
  • Broken below 2015 high, which was acting as a resistance
  • Below 39-week SMA but above 89-week SMA
  • Down trend – 1) broken below an uptrend line; 2) Lower high lower low; 3) turned back from the broken uptrend line on a bounce
  • A break above Thursday high of 2102.56 would mark a reversal pattern
  • Nearing 50-day EMA
  • Nearing the 61.8% Fibonacci retracement level of 2068.89
2-Hour (e-mini future)
  • Downtrend since 10:00 AM on September 22 – mostly lower lows and lower highs; need to break above 2156.50 to break this downtrend line
  • Lower high / lower lows since 4:00 AM October 25
  • Break above 2098.75 would be first higher high since October 27
  • RSI divergences since 12:00 noon November 1
30-Minute (e-mini future)
  • Down trend since 5:00 AM October 25
  • Fell below a sharper down trend line that it broke above on November 3
  • Sideways since 3:30 PM on November 3; forming an ascending triangle

Previous Session

S&P 500 3-Nov-16U.S. markets continued their decline on Thursday. Like on Thursday, the early session up-move in futures and index did not survive the first half hour of trading. Afterwards it was all downhill for most major indices.

S&P 500 extended its down streak to eight days. Since 1950, the index has declined for eight or more days 22 times. Out of these 11 times the streak was extended to nine days and 5 times to ten days. Last time the index was down for eight days was on Thursday August 12 1982. It then begun a bull market. However, in the last three days of the streak it did not breach the lows of August 9. That low has never been breached.

Dow Transportation Average again bucked the trend and closed higher, although, with long upper shadow, like on Wednesday.

Dow Transportation Average 3-Nov-16

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