Morning Notes – Friday November 30, 2018

Directional Bias For The Day:

  • S&P Futures are lower; drifting down since 3:00 PM on Thursday after making bearish RSI divergences on 30-minute and 120-minute timeframes
  • Odds are for a down day – watch for break above 2740.75 for change of fortune
  • Key economic data due:
    • G20 Meeting

Markets Around The World

  • Markets in the East closed mostly lower – Sydney and Seoul were down
  • European markets are lower
  • Currencies:
    Up Down
    • Dollar index
    • USD/JPY
    • USD/CHF
    • NZD/USD
    • USD/CAD
    • EUR/USD
    • GBP/USD
    • AUD/USD
    • USD/INR
  • Commodities:
    Up Down
    • Gold
    • Silver
    • Copper
    • Palladium
    • Sugar
    • Crude Oil
    • NatGas
    • Platinum
    • Coffee
    • Cotton
    • Cocoa
  • Bonds
    • 10-yrs yield is at 3.016%, down from November 29 close of 3.035%;
    • 30-years is at 3.310%, down from 3.328%
    • 2-years yield is at 2.815%, up from 2.807%
    • The 10-Year-&-2-Year spread is at 0.201, down from 0.228

Key Levels:

  • Critical support levels for S&P 500 are 2732.82, 2722.94 and 2717.67
  • Critical resistance levels for S&P 500 are 2748.62, 2753.75 and 2764.24
  • Key levels for eMini futures: break above 2735.75, the high of 5:30 AM and break below 2729.00, the low of 6:30 AM

Pre-Open

  • On Thursday, at 4:00 PM, S&P future (December contract) closed at 2738.75 and the index closed at 2737.76 – a spread of about +1.00 points; futures closed at 2744.25 for the day; the fair value is -5.50
  • Pre-NYSE session open, futures price action is to the downside – at 7:45 AM, S&P 500 futures were down by -13.50; Dow by -136; and NASDAQ by -32.00

Directional Bias Before Open

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

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
  • A harami doji candle with almost equal sized upper and lower shadow; the real body was near the high of Wednesday;
    • %K is above %D and above 80 but turning down
    • briefly broke above the last high of 2746.75 but then closed below it
  • Above 20-day EMA; below 50-day EMA, 100-day SMA, 200-day SMA
  • In Correction
2-Hour (e-mini future)
  • Drifting mostly sideways since 4:00 PM on Wednesday with a slight down bias
  • RSI-9 declining since 2:00 PM on November 28 from a high of 88.64; made a bearish divergence at 12:00 PM on Thursday
  • At/above 20-bar EMA, which is above EMA10 of EMA50;
  • Bias: Side-Up
30-Minute (e-mini future)
  • Moving sideways since 1:30 PM on November 28 within a channel bounded by 2724.00 and 2745.00;
  • Broke above a horizontal channel – high 2671.25 and low 2627.00 – on November 27; the 161.8% extension target above 2742.00 has been achieved
  • RSI-9 trending down since 1:30 PM on November 28; made a bearish divergence at 2:30 Pm on November 29
  • Below 20-bar EMA , which is at/below EMA10 of EMA50; both flattening
  • Bias: Side
15-Minute (e-mini future)
  • Bollinger Band (20, 2.0) is mostly drifting sideways since 4:45 PM on Wednesday
  • The band was narrow from 9:30 PM to 2:45 AM; expanding slightly since then with price moving along the lower band
  • RSI-9 declining since 2:45 PM on Thursday
  • Stochastic (9, 1, 3): %K crisscrossing %D around 20; above %D since 7:00 AM
  • Bias: Side

Previous Session

Major U.S. indices closed lower on Thursday November 29. The volume was also lower from previous day. Market opened to the down side and then rose till 3:00 PM and breaking Wednesday’s high but then gave up the gains in the last hour or teading. Most indices made a harmai doji candle with almost equal sized upper and lower shadows indicating indecision.

From Briefing.com:

The S&P 500 trimmed this week’s rally by 0.2% on Thursday with market participants shifting focus to this weekend’s G-20 meeting between U.S. President Donald Trump and China President Xi Jinping.

Meanwhile, the Dow Jones Industrial Average lost 0.1%, the Nasdaq Composite lost 0.3%, and the Russell 2000 lost 0.3%.

[…]

Personal income increased 0.5% in October (Briefing.com consensus +0.4%) while personal spending jumped 0.6% (Briefing.com consensus +0.4%). Real PCE, which is the component that factors into Q4 GDP forecasts, was up a solid 0.4%. The PCE Price Index was up 0.2% and the core PCE Price Index, which exclude food and energy, was up 0.1% (Briefing.com consensus +0.2%).

The tame inflation readings are the key takeaway from the report since they are supportive of the Federal Reserve taking a more deliberate approach to raising the fed funds rate.

Pending Home Sales decreased 2.6% in October (Briefing.com consensus +0.7%). Today’s reading follows a revised 0.7% increase in September (from +0.5%).

Initial claims for the week ending November 24 increased by 10,000 to 234,000 (Briefing.com consensus 218,000) while continuing claims for the week ending November 17 increased by 50,000 to 1.710 million.

The key takeaway from the report is that it is apt to contribute to assertions that the bottom for the trend in initial and continuing claims may have been reached in this cycle.

  • 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 Cross – Over
Technology Down SPY SPY Below
Utility Under Pressure XLU XLU Above
Heath Care Under Pressure SPY XLV Cross – Over
Real Estate Up XLRE XLRE Cross – Over
Telecom Down SPY SPY Below

 

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