Morning Notes – Wednesday November 14, 2018

Directional Bias For The Day:

  • S&P Futures are higher; moving higher since 4:00 AM from 2711.50
  • Odds are for an up day with elevated volatility – watch for break above 2726.75 for change of fortune
  • Key economic data due:
    • CPI (0.3% vs. 0.3% est. and 0.1% prev. ) at 8:30 AM
    • Core CPI (0.25% vs. 0.2% est. and 0.1% prev.) at 8:30 AM
  • Markets in the East closed mostly lower – Tokyo closed up
  • European markets are mixed – Germany, U.K., France and Spain are higher; Italy, Switzerland and STOXX 600 are lower
  • Currencies:
    Up Down
    • EUR/USD
    • GBP/USD
    • USD/JPY
    • USD/CHF
    • AUD/USD
    • NZD/USD
    • USD/INR
    • Dollar index
    • USD/CAD
  • Commodities:
    Up Down
    • Crude Oil
    • NatGas
    • Copper
    • Palladium
    • Sugar
    • Coffee
    • Cotton
    • Gold
    • Silver
    • Platinum
    • Cocoa
  • Bonds
    • 10-yrs yield is at 3.151%, up from November 13 close of 3.145%;
    • 30-years is at 3.372%, up from 3.367%
    • 2-years yield is at 2.904%, up from 2.896%
    • The 10-Year-&-2-Year spread is at 0.247, down from 0.249

Key Levels:

  • Critical support levels for S&P 500 are 2714.98, 2700.44 and 2685.43
  • Critical resistance levels for S&P 500 are 2730.14, 2739.96 and 2754.60
  • Key levels for eMini futures: break above 2743.75, the high of 6:00 PM on Tuesday and break below 2720.50, the low of 6:30 AM

Pre-Open

  • On Tuesday, at 4:00 PM, S&P future (December contract) closed at 2722.50 and the index closed at 2722.18 – a spread of about +0.25 points; futures closed at 2727.50 for the day; the fair value is -5.00
  • Pre-NYSE session open, futures price action is to the upside – at 8:45 AM, S&P 500 futures were up by +14.25; Dow by +108; and NASDAQ by +42.50

Directional Bias Before Open

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

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

Monthly
  • Under Pressure
  • October 2018 closed sharply lower; broke below previous four months’ lows; only third down month since October 2016
  • Uptrend resumption since Feb 08, 2016 after a pull back of -15.2% – continues; higher highs and higher lows
Weekly:
  • The week ending on November 9 was a green candle with a large upper shadow and small lower shadow
    • Stochastics (9,1, 3) and RSI (14) turning up – %K crossed above %D from below 10 and RSI turned up from 36.35
    • During the week of October 22, Stochastics reached the lowest since the week of October 31, 2016 and RSI the lowest since the week on Jan 11, 2016
  • Last week was up by 57.95 and ATR is 97.21
  • Last week’s pivot point=2771.37, R1=2824.79 R2=2798.58; S1=2699.44, S2=2676.71; R1 pivot levels was breached;
  • Second up week in a row; third in last five weeks and fifth in last ten weeks
  • Broke above an ascending triangle but retraced back to its upper limit; 100% extension target is near 3070.00 level; retraced back to the lower trend line of triangle
  • 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 near 2913.13 is achieved; the 161.8% extension target is near 3138.85
  • 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, 2532.69, was the low on February 5, 2018; Last swing high, 2940.91, was during the week of September 17, 2018;
  • Below 10-week EMA and 39-week SMA; above 89-week SMA
  • Uptrend Under Pressure
Daily
  • A small red candle near the lower part of the real body of Monday; large upper shadow and small lower shadows
    • %K is crossed below %D after touching 99 on October 8
    • Still lower highs and lower lows since October 3; need to move above October 17 high of 2816.94 to break the sequence; made a high of 2815.15 on Thursday
    • Move above 2814.75 will be bullish and move below 2794.99 will be bearish
  • Below 20-day EMA, 50-day EMA, 100-day SMA, 200-day SMA
  • In Correction
2-Hour (e-mini future)
  • Declining since 4:00 PM on November 7; below a downtrend line; in danger below the lows of November , which would break the sequence of higher highs and higher lows since October 29
  • RSI-9 rising since 2:00 PM on November 2; broke above a downtrend line; just below 50
  • Below 20-bar EMA, which is below EMA10 of EMA50; both trending down
  • Bias: Side-Down
30-Minute (e-mini future)
  • Declining since 8:00 PM on November 7; moving sideways with a down bias since 3:00 PM on November 12
  • RSI-9 between 40 and 65 since 3:30 PM on November 12;; rising above 55 from 30.31 at 3:30 AM
  • Above 20-bar EMA but below EMA10 of EMA50; both flattening to lower
  • Bias: Down-Side
15-Minute (e-mini future)
  • Bollinger Band (20, 2.0) is drifting sideways 7:00 PM on November 12
  • The band is mostly narrow since Monday evening
  • RSI-9 mostly between 40 and 65 since 11:30 AM on November 12
  • Stochastic (9, 1, 3): %K crisscrossing %D above 50 since 5:00 AM
  • Bias: Side

Previous Session

Major U.S. indices closed mostly lower on Tuesday November 13 in mixed volume. NASDAQ Composite was unchanged and Dow Jones Transportation Average up. Both also traded in higher volume.

From Briefing.com:

The S&P 500 coughed up a morning rebound effort to close Tuesday loss of 0.2%. The benchmark index had climbed as high as 1.0% amid early U.S.-China trade optimism, but energy stocks eventually led the broader market lower as oil prices tanked.

Meanwhile, the Dow Jones Industrial Average lost 0.4%, the Nasdaq Composite finished flat, and the Russell 2000 lost 0.3%.

WTI crude fell 7.0% to $55.67/bbl, extending its losing streak to 12 straight sessions and settling at its lowest level since November 2017.

[…]

Elsewhere, U.S. Treasuries jumped, pushing yields lower across the curve. The 2-yr yield lost five basis points to 2.88%, and the 10-yr yield lost four basis points to 3.15%. Meanwhile, the U.S. Dollar Index decreased 0.4% to 97.19.

Overseas, global markets edged mostly higher on Tuesday with China’s Shanghai Composite (+0.9%) and Germany’s DAX (+1.3%) showing relative strength.

[…]

  • S&P 500 Sectors
Sector Daily Trend (Visual) Relative Strength (Last Month – October) Relative Strength (Current) %K vs. %D
Consumer Discretionary Down SPY XLY Below
Consumer Staples Under Pressure XLP XLP Above
Energy Down SPY SPY Below
Materials Down XLB XLB Cross – Over
Industrials Down SPY XLI Below
Finance Down XLF XLF Cross – Over
Technology Down SPY SPY Below
Utility Under Pressure XLU XLU Above
Heath Care Under Pressure SPY XLV Below
Real Estate Down (Turning Up) XLRE XLRE Cross – Over
Telecom Down SPY SPY Below

 

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