Morning Notes – Tuesday October 2, 2018

Directional Bias For The Day:

  • S&P Futures are lower but moving higher since 5:00 AM after making bullish RSI divergence on 30-minute charts
  • Odds are for a sideways to an up day; watch for break below 2921.75 and break above 2931.75
  • No key economic data due:

Markets Around The World

  • Markets in the East closed mostly down – Tokyo was up; Shanghai and Mumbai were closed
  • European markets are lower
  • Currencies:
    Up Down
    • Dollar index
    • USD/CHF
    • NZD/USD
    • EUR/USD
    • GBP/USD
    • USD/JPY
    • AUD/USD
    • USD/CAD
    • USD/INR
  • Commodities:
    Up Down
    • Crude Oil
    • NatGas
    • Platinum
    • Gold
    • Silver
    • Copper
    • Sugar
    • Coffee
    • Cotton
    • Cocoa
    • Palladium
  • Bonds
    • 10-yrs yield is at 3.056%, down from October 1 close of 3.080%;
    • 30-years is at 3.211%, down from 3.232%
    • 2-years yield is at 2.807%, down from 2.823%
    • The 10-Year-&-2-Year spread is at 0.249, down from 0.257

Key Levels:

  • Critical support levels for S&P 500 are 2920.43, 917.91 and 291123
  • Critical resistance levels for S&P 500 are 2928.54, 2930.61 and 2937.06
  • Key levels for eMini futures: break above 2931.75, the low of 8:30 AM on October 1 and break below 2921.75, the low of 7:30 AM

Pre-Open

  • On Monday, at 4:00 PM, S&P future (December contract) closed at 2929.25 and the index closed at 2924.59 – a spread of about +5.00 points; futures closed at 2930.00 for the day; the fair value is -0.75
  • Pre-NYSE session open, futures price action is to the downside – at 8:30 AM, S&P 500 futures were down -2.25; Dow by -49.00; and NASDAQ by -16.75

Directional Bias Before Open

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

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

Monthly
  • Confirmed Uptrend
  • December 2017 closed higher; index has been higher for the nine straight months; it has only one down month, March 2017, since October 2016
  • Uptrend resumption since Feb 08, 2016 after a pull back of -15.2%
Weekly:
  • The week ending on September 28 was a small red candle – that looks like a doji – with almost equal sized small upper and lower shadows;
    • the whole candle, with shadows, was completely contained within the real body of previous week
    • Stochastics (9,1, 3) and RSI (14) are making bearish divergences
  • Last week’s pivot point=2916.14, R1=2928.99 R2=2944.01; S1=2901.12, S2=2888.27;no pivot levels were breached;
  • A down week after two up weeks; second in last five weeks and third in last ten weeks
  • Broke above an ascending triangle but retraced back to its upper limit; 100% extension target is near 3070.00 level
  • Broke above a down sloping flag on April 24 2017;
    • flag-low was 2322.25 during 27-Mar-17 week; shorter flag-pole length is 317.19 and longer flag-pole length is 590.88;
    • 100% extension target of shorter flag-pole near 2639.44 and the 161.8% extension target near 2835.46 are achieved; the 261.8% extension target is near 3013.72
    • 61.8% extension target of longer flag-pole near 2687.41 is achieved; the 100% extension target is near 2913.13
  • Broke above a down-sloping flag on November 14, 2016;
    • the flag low was 2083.79 during 31-Oct-16 week; the shorter flag-pole length is 202.13 and the longer flag-pole length is 383.71;
    • 261.8% extension target of shorter flag-pole near 2612.97 is achieved
    • the 161.8% extension target of longer flag-pole near 2704.63 is achieved; the 261.8% extension target is near 3088.34
  • Last swing low, 2322.25, was the low on March 27, 2017; Last swing high, 2872.87, was during the week of January 22, 2-018; the low since the last swing high is 2532.69 during the week if February 5, 2018
  • Above 10-week EMA; above 39-week SMA and above 89-week SMA
  • Uptrend
Daily
  • A small red doji candle with small lower shadow but larger upper shadow; a break below Monday’s low will be critical
  • %K crossed above %D but is agan drooping down
  • Above 20-day EMA, above 50-day EMA, 100-day SMA and 200-day SMA
  • Uptrend
2-Hour (e-mini future)
  • Broke above a down trendline from the high of September 21; retraced back to the broken uptrend line
  • RSI-9 turning up from a low of 30.67 reached at 4:00 AM
  • At/above 20-bar EMA, which is at/above EMA10 of EMA50
  • Bias: Side
30-Minute (e-mini future)
  • Breaking above ad own trendline form October 1 high;
  • RSI-9 made a bullish divergence at 4:30 AM near 30; above 50
  • Above 20-bar EMA, but below 50-bar EMA
  • Bias: Down-Side
15-Minute (e-mini future)
  • Bollinger Band (20, 2.0) is mostly trending down since 2:00 PM on Monday;
  • The band was narrow from 10:00 PM to 4:00 AM; expanding since with price first moved along the lower band till 5:00 AM; price nearing the upper band
  • RSI-9 made bearish divergence at 5:00 AM just above 65 and Is trending down; below 40
  • The Stochastic (9, 1, 3): %K is moving down and crisscrossing %D since 5:00 AM
  • Bias: Down-Side

Previous Session

Major U.S. indices closed mixed on Monday October 1 in mixed volume. NASDAQ Composite and Russell 2000 declined and other advanced. Dow Jones Transportation Average and Russell 2000 trade in higher volume and others in lower volume.

The indices gapped up at the open made high  in first hour of trading and then steadily declined for rest of the day. Most also closed the gap and then gave up some more, effectively making a reversal candle. A break below Monday’s close is critical.

  • S&P 500 Sectors
Sector Daily Trend Relative Strength Last Month Relative Strength Last Month
Consumer Discretionary Up XLY XLY
Consumer Staples Side SPY SPY
Energy Side SPY SPY
Materials Side SPY SPY
Industrials Up-Side XLI XLI
Finance Side-Down SPY SPY
Technology Up XLK XLK
Utility Down SPY SPY
Heath Care Up XLV SPY
Real Estate Side-Down SPY SPY
Telecom Side SPY SPY

 

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