Morning Notes – Friday October 5, 2018

Directional Bias For The Day:

  • S&P Futures are volatile due to Non-Farm Payroll; mostly sideways since 4:00 PM on Thursday
  • Odds are for a down day; Volatile day; watch for break above 2910.25 and below 2897.25 for more clarity
  • Key economic data due:
    • Non-Farm Employment Change (134K vs. 185K est.) at 8:30 AM
    • Unemployment Rate (3.7% vs. 3.8% est.) at 8:30 AM
    • Average Hourly Earnings (0.3% vs. 0.3% est.) at 8:30 AM

Markets Around The World

  • Markets in the East closed mostly down – Sydney was up; Shanghai was closed
  • European markets are down
  • Currencies:
    Up Down
    • Dollar index
    • GBP/USD
    • USD/JPY
    • USD/CHF
    • USD/INR
    • EUR/USD
    • AUD/USD
    • NZD/USD
    • USD/CAD
  • Commodities:
    Up Down
    • Crude Oil
    • NatGas
    • Gold
    • Silver
    • Platinum
    • Palladium
    • Sugar (Unch.)
    • Coffee
    • Cotton
    • Cocoa
    • Copper
  • Bonds
    • 10-yrs yield is at 3.204%, up from October 4 close of 3.197%;
    • 30-years is at 3.366%, up from 3.347%
    • 2-years yield is at 2.893%, up from 2.868%
    • The 10-Year-&-2-Year spread is at 0.311, down from 0.329

Key Levels:

  • Critical support levels for S&P 500 are 2893.68. 2883.29 and 2879.20
  • Critical resistance levels for S&P 500 are 2903.72, 2908.70 and 2911.24
  • Key levels for eMini futures: break above 2910.25, the high of 7:00 AM and break below 2900.75, the low of 4:30 AM

Pre-Open

  • On Thursday, at 4:00 PM, S&P future (December contract) closed at 2906.25 and the index closed at 2901.61 – a spread of about +4.75 points; futures closed at 2907.75 for the day; the fair value is -1.50
  • Pre-NYSE session open, futures price action is to the downside – at 8:00 AM, S&P 500 futures were down -3.00; Dow by -18.00; and NASDAQ by -16.25

Directional Bias Before Open

  • Weekly: Uptrend
  • Daily: Uptrend Under Pressure
  • 120-Min: Side-Down
  • 30-Min: Down
  • 15-Min: Down-Side
  • 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 relatively large red candle with no upper shadow and a lower shadow almost equal to the real body; the index gapped down at the open that did not close
  • %K crossed below %D
  • Below 20-day EMA; above 50-day EMA, 100-day SMA and 200-day SMA
  • Uptrend Under Pressure
2-Hour (e-mini future)
  • Broke below an intermediate low between to high and completing a double top; 100% extension target near 2892.00 is achieved; the 161.8% extension target is near 2877.00
  • RSI-9 rising from a low of 19.95 to 40
  • Below 20-bar EMA, which is below EMA10 of EMA50
  • Bias: Side-Down
30-Minute (e-mini future)
  • Below a down trendline from October 3 high; just below a resistance level of 2913.25
  • RSI-9 rose from a low of 19.92 at 2:00 PM on October 4 to just above 50
  • Above 20-bar EMA but below 50-bar EMA
  • Bias: Down
15-Minute (e-mini future)
  • Bollinger Band (20, 2.0) is mostly moving sideways since 7:30 PM on October 4
  • The band was narrow from 11:00 PM to 3:00 AM; expanding since with price moving along the lower band till 4;30 AM and is now approaching the upper band
  • RSI-9 rising from a low of 24.72 at 4:30 AM to above 50
  • The Stochastic (9, 1, 3): %K is crossed below %D above 80 at 7:15 AM
  • Bias: Down-Side

Previous Session

Major U.S. indices closed lower on Thursday October 4 after a gap-down open. Most did not reach the opening high. Dow Jones Transportation Average was the exception. The volume was high for all except DJT. Rising yields played a big part is day’s decline.

From Briefing.com:

A robust economic outlook, underlined by Wednesday’s stronger-than-expected ADP Employment Change report for September — which is a prelude to Friday’s consequential nonfarm payrolls reading — helped ignite the Treasury sell-off, thereby increasing yields. The yield on the benchmark 10-yr note climbed another four basis points on Thursday to 3.20% and is now up 16 basis points since Tuesday.

  • S&P 500 Sectors
Sector Daily Trend Relative Strength (Last Month) Relative Strength (Current Month)
Consumer Discretionary Down (Break below trading zone – 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 (Under Pressure) XLK SPY
Utility Up-Side SPY XLU
Heath Care Up (under Pressure) XLV SPY
Real Estate Down SPY SPY
Telecom Side XTL SPY

 

Print Friendly, PDF & Email

Leave a Reply