Morning Notes – Thursday October 4, 2018

Directional Bias For The Day:

  • S&P Futures are lower; but moving higher since 5:00 AM after making a double bottom at 2913.25 and bullish divergence on 15-minute chart
  • Odds are for a down day; watch for break above 2924.00 and 2925.50 for change of fortune
  • Key economic data due:
    • Unemployment Claims (207K vs. 214K) at 8:30 AM

Markets Around The World

  • Markets in the East closed mostly down – Sydney was up; Shanghai was closed
  • European markets are mostly down – Germany is up
  • Currencies:
    Up Down
    • Dollar index
    • EUR/USD
    • GBP/USD
    • USD/CHF
    • USD/CAD
    • USD/JPY
    • AUD/USD
    • NZD/USD
    • USD/INR
  • Commodities:
    Up Down
    • NatGas
    • Gold
    • Silver
    • Copper
    • Sugar (Unch.)
    • Coffee
    • Cocoa
    • Crude Oil
    • Platinum
    • Palladium
    • Cotton
  • Bonds
    • 10-yrs yield is at 3.193%, up from October 3 close of 3.161%;
    • 30-years is at 3.351%, up from 3.319%
    • 2-years yield is at 2.880%, up from 2.868%
    • The 10-Year-&-2-Year spread is at 0.315, up from 0.293

Key Levels:

  • Critical support levels for S&P 500 are 2921.36. 2919.49, 2917.91 and 2911.23
  • Critical resistance levels for S&P 500 are 2928.04, 2931.69 and 2937.37
  • Key levels for eMini futures: break above 2924.00, the low on 3:00 AM on October 2 and break below 2917.50, the low of 8:30 AM

Pre-Open

  • On Wednesday, at 4:00 PM, S&P future (December contract) closed at 2930.25 and the index closed at 2925.51 – a spread of about +4.75 points; futures closed at 2931.50 for the day; the fair value is -1.25
  • Pre-NYSE session open, futures price action is to the downside – at 8:30 AM, S&P 500 futures were down -9.00; Dow by -155.00; and NASDAQ by -58.75

Directional Bias Before Open

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

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 red candle with small lower shadow but larger upper shadow; gapped up at the open but it was closed in the last hour of trading; the index had turned red before closing with a small gain
  • %K is still above %D
  •  Above 20-day EMA, above 50-day EMA, 100-day SMA and 200-day SMA
  • Uptrend
2-Hour (e-mini future)
  • Near the low of 2917.50 at 2:00 AM on October 2; a convincing break it will complete a double top pattern with 100% extension target near 2890.00 level
  • RSI-9 made a bearish divergence at 10:00 AM on October 3 above 65; below 40
  • Below EMA10 of EMA50, which is below 20-bar EMA
  • Bias: Side
30-Minute (e-mini future)
  • Near the low of a horizontal channel; a break below 2917.50 will have a 61.8% target near 2900.00 level
  • RSI-9 rising after staying below 40 from 2:30 PM on October 3 to 5:00 AM; above 40
  • At/below 20-bar EMA, which is below 50-bar EMA
  • Bias: Down
15-Minute (e-mini future)
  • Bollinger Band (20, 2.0) is mostly trending down since 2:45 PM on October 3
  • The band was relatively narrow from 11:00 PM to 5:00 AM with price moving along the lower band; expanding since with price moving along upper band
  • RSI-9 was below 40 from 2:30 PM on October 3 to 4:45 AM; near 50
  • The Stochastic (9, 1, 3): %K is crossed below %D above 80
  • Bias: Down

Previous Session

Major U.S. indices closed higher on Wednesday October 3 after a gap-up open. However, the indices gave up most of their gains in the last hour of trading. The volume was mixed. Dow Jones Transportation Average and Russell 2000 traded in lower volumes.

  • S&P 500 Sectors
Sector Daily Trend Relative Strength (Last Month) Relative Strength (Current Month)
Consumer Discretionary Up-Side (Break Down Support = 114.80) XLY SPY
Consumer Staples Side (Break Down Support = 53.49) SPY SPY
Energy Up (From Side) SPY XLE
Materials Side SPY XLB
Industrials Up-Side XLI XLI
Finance Side SPY XLF
Technology Up XLK XLK
Utility Up-Side SPY SPY
Heath Care Up XLV SPY
Real Estate Side-Down SPY SPY
Telecom Side XTL SPY

 

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