Morning Notes – Monday November 7, 2016

Directional Bias For The Day:

S&P 500 7-Nov-2016 (2-Hourly) 7:00 AM

  • The futures are sharply up
  • S&P 500 has been down for nine consecutive day; last time it did that was on December 11 1980; it advanced for seven consecutive days after that and 19 out of 24
  • 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 sharply up
  • European markets are up after a gap up open and maintaining those levels
  • Dollar index and USD/JPY are up; EUR/USD and GBP/USD are down
  • Commodities are mixed – copper, crude and NatGas are up; gold and silver are down

Key Levels:

  • Critical support levels for S&P 500 are 2100.74, 2084.59, and 2079.62
  • Critical resistance levels for S&P 500 are 2114.74, 2124.43, and 2131.45
  • Key levels for eMini futures: break above 2112.00, the 4:30 AM high, and break below 2102.75, the low of 7:30 PM on November 6


  • Pre-NYSE session open, futures price action is slightly to the up side; at 8:45 AM, S&P 500 futures were up by +29.50, Dow by +253.00 and NASDAQ by +72.25
  • On Friday, at 4:00 PM, S&P future (Dec contract) closed at 2080.25 and the index closed at 2085.18 – a spread of about 5.00 points; futures closed at 2080.00 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
  • At 50-day EMA
  • Nearing the 61.8% Fibonacci retracement level of 2068.89
2-Hour (e-mini future)
  • Gapped up following U.S. election news
  • 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
  • First higher high following a sequence of lower high / lower lows since 4:00 AM October 25
  • RSI divergences since 12:00 noon November 1 and an uptrend line on RSI
30-Minute (e-mini future)
  • Broken above the down trend that was on since 5:00 AM October 25
  • Gapped up to the resistance level formed by 4:00 PM high on November 1 and 10:00 AM high on November 2
  • Sideways since 6:00 PM on November 6 along the resistance zone

Previous Session

S&P 500 04-Nov-16Major U.S. indices were mixed on Friday. S&P 500, Dow Jones Industrial Average and NADAQ Composite opened with a gap down but then they climbed up. By 1:30 PM, S&P 500 was over 10 points above its Thursday close. However, it gave up the ghost after that and closed down for the day along with DJIA and NASDAQ.

Dow Transportation Average and Russell 2000 followed the similar trajectory but they closed up for the day. Transportation Average is the best looking technical chart at the moment, relatively speaking.
Dow Transportation Average 4-Nov-16


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