Morning Notes – Monday November 26, 2018

Directional Bias For The Day:

  • S&P Futures are higher; moving lower since 4:45 AM
  • Bias on daily timeframe is to the down side; intraday bias for NYSE open is to the upside; odds are for a choppy day with elevated volatility – watch for break above 2663.25 and break below 2651.00 for clarity
  • No key economic data due:

Markets Around The World

  • Markets in the East closed mostly higher – Shanghai and Sydney closed down
  • European markets are higher
  • 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
    • Gold
    • Silver
    • Platinum
    • Palladium
    • Cotton
    • NatGas
    • Copper
    • Sugar
    • Coffee
    • Cocoa
  • Bonds
    • 10-yrs yield is at 3.063%, up from November 23 close of 3.054%;
    • 30-years is at 3.311%, up from 3.310%
    • 2-years yield is at 2.837%, up from 2.820%
    • The 10-Year-&-2-Year spread is at 0.226, up from 0.234

Key Levels:

  • Critical support levels for S&P 500 are 2647.55, 2631.09 and 2603.54
  • Critical resistance levels for S&P 500 are 2666.42, 2670.57 and 2681.09
  • Key levels for eMini futures: break above 2663.25, the high of 7:00 AM and break below 2655.25, the low of 8:30 AM

Pre-Open

  • On Friday, at 1:00 PM, S&P future (December contract) closed at 2632.75 and the index closed at 2632.56 – a spread of about +0.25 points; futures closed at 2629.50 for the day; the fair value is +2.25
  • Pre-NYSE session open, futures price action is to the upside – at 9:00 AM, S&P 500 futures were up by +29.75; Dow by +254; and NASDAQ by +101.25

Directional Bias Before Open

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

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 23 was a large red candle with a small lower shadow and almost no upper shadow
    • Stochastics (9,1, 3) and RSI (14) turning down – %K again crossed below %D from just below 50 and RSI also turned down from just below 50
    • 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 down by -44.74 or -1.6% and ATR is 105.24
  • Last week’s pivot point=2727.67, R1=284.59 R2=2832.91; S1=2679.35, S2=2622.43; S1/S2 pivot levels were breached;
  • A down week; second 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
  • An almost shooting star like candle that touched the low of a three-day gap-down island; a break above the high or below the low will be critical for short term direction
    • %K is below %D and near 5
    • Still lower highs and lower lows since October 3; the break above the last lower high of 2816.94 on October 17 was missed by a whisker
  • 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; lower high and lower lows
  • RSI-9 rising since 8:00 AM on November 20; made a bullish divergence at 12:00 PM on November 23
  • Above 20-bar EMA; at/below EMA10 of EMA50; both trending down
  • Bias: Down
30-Minute (e-mini future)
  • In a sideway moving range; near the upper end of a horizontal channel in progress since 7:30 AM on November 20
  • RSI-9 mostly rising since 4:00 AM on November 22; made couple of bullish divergence since then
  • Above 20-bar EMA , which is above EMA10 of EMA50; both rising
  • Bias: Down-Side
15-Minute (e-mini future)
  • Bollinger Band (20, 2.0) is moving up since 10:00 PM on Sunday after mostly moving sideways from 8:00 PM on November 21
  • The band was narrow from 11:00 PM to 2:00 AM; expanded till 8:00 AM and again narrowing
  • RSI-9 declining after making a high above 80 at 4:00 AM; just below 50
  • Stochastic (9, 1, 3): %K crossing above %D from below 10 at 7:45 AM
  • Bias: Side-Up

Previous Session

Major U.S. indices closed mostly down on Friday November 23, the shortened trading day following Thanksgiving. Russell 2000 and Dow Jones Transportation Average were up.

Indices were down for the week as all S&P sectors closed lower. European and Asian markets were also down for the week.

From Briefing.com:

The S&P 500 fell 3.8% on this holiday-shortened trading week, erasing its gain for the year. The Dow Jones Industrial Average lost 4.4%, the Nasdaq Composite lost 4.3%, and the Russell 2000 lost 2.6%.
There was palpable sense of real angst about the market’s prospects with market commentary beginning to emphasize the growing risk of a bear market. Factors contributing to that outlook have included rising recession risk; widening credit spreads; the message being sent by the sharp losses in cyclical sectors and former leadership stocks/sectors; lack of buy-the-dip success in November, calling into question the prospects of a seasonal rally; and burgeoning calls to bolster defensive positioning in investment portfolios.

[…]

WTI crude, which has been pressured by ongoing supply concerns and decreasing demand, dropped 9.2% to $51.28/bbl this week and extended its decline to 33.3% from last month’s four-year high.

[…]

U.S. Treasuries ended the week on a mixed note. The 2-yr yield added three basis points to 2.83%, and the 10-yr yield decreased two basis points to 3.05%. Meanwhile, the U.S. Dollar Index increased 0.4% to 96.94

  • 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 Side XLB XLB Cross – Over
Industrials Down SPY XLI Below
Finance Down XLF XLF Below
Technology Down SPY SPY Below
Utility Under Pressure XLU XLU Above
Heath Care Under Pressure SPY XLV Below
Real Estate Up XLRE XLRE Cross – Over
Telecom Down SPY SPY Below

 

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