Directional Bias For The Day:
- S&P Futures are lower; moving sideways since 2:00 PM on Friday
- Odds are for a sideways to an up day with choppiness and elevated volatility – watch for break above 2729.50 and below 2714.00 for clarity
- Key economic data due:
- ISM Non-Manufacturing PMI (60.3 vs. 59.3 est. and 61.6 prev. ) at 10:00 AM
Markets Around The World
- Markets in the East closed lower
- European markets are mixed – U.K., France, Spain and Switzerland are up; Germany, Italy and STOX 600 are down
- Dollar index
- Crude Oil
- 10-yrs yield is at 3.189%, down from November 2 close of 3.214%;
- 30-years is at 3.427%, down from 3.453%
- 2-years yield is at 2.899%, down from 2.919%
- The 10-Year-&-2-Year spread is at 0.290, down from 0.295
- Critical support levels for S&P 500 are 2712.86, 2700.44 and 2685.43
- Critical resistance levels for S&P 500 are 2733.78, 2748.10 and 2756.55
- Key levels for eMini futures: break above 2729.50, the high of 7:00 AM and break below 2714.00, the low of 4:00 AM
- On Friday, at 4:00 PM, S&P future (December contract) closed at 2721.75 and the index closed at 2723.06 – a spread of about +1.25 points; futures closed at 2724.25 for the day; the fair value is -2.50
- Pre-NYSE session open, futures price action is to the downside – at 8:30 AM, S&P 500 futures were down by -1.75; Dow by -21; and NASDAQ by -17.25
Directional Bias Before Open
- Weekly: In Correction
- Daily: In Correction
- 120-Min: Up-Side
- 30-Min: Side
- 15-Min: Side
- 6-Min: Side
The trend and patterns on various time frames for S&P 500 are:
|2-Hour (e-mini future)||
|30-Minute (e-mini future)||
|15-Minute (e-mini future)||
Major U.S. indices closed mostly down on Friday November 2. The volume was mostly higher from previous day. Russell 2000 closed higher in lower volume and other indices closed down in higher volume. Only two S&P sectors – Consumer Discretionary and Telecom – closed up on Friday.
For the, major indices closed higher but in lower volume than previous week. Only one S&P sector – Utility – closed lower for the week.
Stocks fell on Friday following conflicting U.S.-China trade reports and softer-than-expected sales guidance from Apple (AAPL 207.48, -14.74, -6.6%).
The S&P 500 lost 0.6%, the Dow Jones Industrial Average lost 0.4%, and the Nasdaq Composite lost 1.0%. Small caps outperformed, with the Russell 2000 adding 0.2%. All four major indices closed solidly higher for the week, adding between 2.4% and 4.3% apiece.
In short, the strong jobs report validated labor market trends that will keep the Federal Reserve on a tightening path. The CME FedWatch Tool indicated a 80.7% chance of another Fed rate hike in December, up from a 74.5% chance the previous day. The Fed will meet next week, but no rate hike is expected.
Treasuries sold-off with equities on Friday, pushing yields notably higher across the curve. The Fed-sensitive 2-yr yield and benchmark 10-yr yield spiked seven basis points each to 2.91% and 3.21%, respectively, compared to 2.81% and 3.08% yields last week. Also, the U.S. Dollar Index added 0.2% to 96.48.
The key takeaway from the October employment report is that it is consistent with labor market trends that will keep the Federal Reserve on a tightening path
Cyclical sectors were largely the best-performing groups this week, with the lightly-weighted materials sector (+6.1%) and the heavily-weighted financials (+4.4%) sectors leading the advance. The consumer discretionary sector (+4.0%) also had a notable gain. On the downside, utilities was the only group to settle in the red, losing 0.6%.
Overseas, European and Asian stocks rose with Wall Street this week. In Germany, Chancellor Angela Merkel announced that she won’t be seeking re-election as head of the CDU, following disappointing results for her party in a regional election.
Meanwhile, the Bank of England and the Bank of Japan released their latest policy decisions, keeping interest rates unchanged.
- S&P 500 Sectors
|Sector||Daily Trend (Visual)||Relative Strength (Last Month – October)||Relative Strength (Current)||%K vs. %D|
|Consumer Staples||Under Pressure||XLP||XLP||Above|
|Materials||Down||XLB||XLB||Cross – Over|
|Finance||Down||XLF||XLF||Cross – Over|
|Heath Care||Under Pressure||SPY||XLV||Below|
|Real Estate||Down (Turning Up)||XLRE||XLRE||Below|