Morning Notes – Wednesday October 10, 2018

Directional Bias For The Day:

  • S&P Futures are lower; moving further lower since 7:30 AM; broke below a descending triangle on 15-minute chart with 100% extension target near 2862.00 level
  • Odds are for a down day with volatility – watch for break above 2889.50 for change of fortune
  • Key economic data due:
    • PPI ( 0.2% vs. 0.2% est.) at 8:30 AM
    • Core PPI ( 0.2% vs. 0.2% est.) at 8:30 AM

Markets Around The World

  • Markets in the East closed mostly higher – Seoul and Singapore were down
  • European markets are mostly down – Italy and Switzerland are up
  • Currencies:
    Up Down
    • Dollar index
    • EUR/USD
    • GBP/USD
    • USD/JPY
    • USD/CHF
    • USD/CAD
    • USD/INR
    • AUD/USD
    • NZD/USD
  • Commodities:
    Up Down
    • NatGas
    • Gold
    • Silver
    • Palladium
    • Coffee
    • Cocoa
    • Crude Oil
    • Copper
    • Platinum
    • Sugar
    • Cotton
  • Bonds
    • 10-yrs yield is at 3.228%, up from October 9 close of 3.208%;
    • 30-years is at 3.390%, up from 3.370%
    • 2-years yield is at 2.910%, up from 2.885%
    • The 10-Year-&-2-Year spread is at 0.319, down from 0.323

Key Levels:

  • Critical support levels for S&P 500 are 2874.27, 2862.08 and 2854.03
  • Critical resistance levels for S&P 500 are 2894.83, 2903.04 and 2909.40
  • Key levels for eMini futures: break above 2890.50, the high of 3:00 AM and break below 2879.00, the low of 9:30 AM on Tuesday

Pre-Open

  • On Tuesday, at 4:00 PM, S&P future (December contract) closed at 2885.75 and the index closed at 2880.34 – a spread of about +5.25 points; futures closed at 2888.25 for the day; the fair value is -2.50
  • Pre-NYSE session open, futures price action is to the downside – at 8:15 AM, S&P 500 futures were down -5.75; Dow by -29.00; and NASDAQ by -36.25

Directional Bias Before Open

  • Weekly: Uptrend Under Pressure
  • Daily: Uptrend Under Pressure
  • 120-Min: Down
  • 30-Min: Down-Side
  • 15-Min: Down-Side
  • 6-Min: 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 October 5 was a large bearish engulfing candle which closed below past two weeks’ low
    • Stochastics (9,1, 3) and RSI (14) made bearish divergences
  • Last week’s pivot point=2898.24, R1=2927.19 R2=2968.81; S1=2856.62, S2=2827.67; S1/R1 pivot levels were breached;
  • Second down week in a row; third in last five weeks and fourth 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
  • At 10-week EMA; above 39-week SMA and above 89-week SMA
  • Uptrend Under Pressure
Daily
  • A relatively small red doji candle with small upper shadow and smaller lower; continue the bounce off the support zone near 2850.-2870 level;
  • %K crossed below %D after one staying above it
  • Below 20-day EMA; at/above 50-day EMA; above 100-day SMA and 200-day SMA
  • Uptrend Under Pressure
2-Hour (e-mini future)
  • Breaking above a down trendline from October 3 high but by moving sideways; bounced off the support made by the low on September 7
  • RSI-9 rising from a low of 19.95 on October 4 and after making a bullish divergence at 10:00 AM on October 8; crossed above 40 at 6:00 AM on October 9
  • Below 20-bar EMA, which is below EMA10 of EMA50
  • Bias: Down
30-Minute (e-mini future)
  • Moving sideways since 1:00 PM on October 9 between 2893.00 and 2881.00; also moving mostly sideways since 11:00 AM on October 5 between 2898.00 and 2866.00
  • RSI-9 between 40 an d65 since 8:00 AM on October 9
  • At 20-bar EMA, which is At/below 50-bar EMA
  • Bias: Down-Side
15-Minute (e-mini future)
  • Bollinger Band (20, 2.0) is mostly moving sideways since 6:00 PM on Tuesday
  • The band was narrow from 7:30 PM to 10:30 PM; expanding slightly
  • RSI-9 mostly between 40 and 65 since 8:15 AM on October 9; rising from just below 40 since 4:00 AM; just above 50
  • The Stochastic (9, 1, 3): %K is crossed above %D from 0 at 4:15 AM; crisscrossing %D upwards; above 90
  • Bias: Down-Side

Previous Session

Major U.S. indices closed mostly lower on Tuesday October 9 in mixed volume. NASDAQ Composite was higher. Dow Jones Industrial Average and Dow Jones Transportation Average traded in higher volume. Five S&P sectors – Energy, Technology, Utility, Healthcare and Real Estate – closed were higher for the day.

From Briefing.com:

U.S. stocks waffled on Tuesday amid concerns about growth, rising interest rates, and the impending arrival of Hurricane Michael in Florida’s panhandle. The broader market seemed reluctant to make a decisive move in any direction, as the S&P 500 index crossed back and forth across the unchanged line numerous times during the trading session.

  • 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 XLP
Energy Up (From Side) SPY XLE
Materials Side SPY SPY
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 XLV
Real Estate Down SPY SPY
Telecom Side XTL SPY

 

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