Morning Notes – Thursday, November 2, 2023

Directional Bias For The Day:

  • S&P Futures are higher at 9:00 AM – moving up since 2:45 AM after a sideways drift that lasted a few hours
  • The odds are for an up day with elevated volatility – watch for a break below 4274.250 for a change of sentiments
  • The major economic data reports due during the day:
    • Unemployment Claims ( 217K vs. 210K est.; prev. 212K) at 8:30 AM
    • Prelim Nonfarm Productivity ( 4.7% vs. 4.2% est.; prev. 3.5%) at 8:30 AM
    • Prelim Labor Costs ( -0.8% vs. 0.2% est.; prev. 2.2%) at 8:30 AM
    • Factory Orders ( 2.2% est.; prev. 1.2%) at 10:00 AM
  • Weekly: In Correction
  • Daily: In Correction
  • 120-Min: Up
  • 30-Min: Up
  • 15-Min: Up
  • 6-Min: Up-Side

Key Levels:

  • Critical support levels for the S&P 500 are 4245.64, 4224.21, and 4202.02
  • Critical resistance levels for the S&P 500 are 4283.79, 4290.04, and 4302.23
  • The key levels for E-mini futures are 4298.00, the high at 8:45 AM and 4274.25, the low at 6:30 AM

Pre-Open

  • On Wednesday at 4:00 PM, S&P futures (December 2023) closed at 4256.50, and the index closed at 4237.86 – a spread of about +18.75 points; the futures closed at 4256.00; the fair value is +0.50
  • Pre-NYSE session open, futures were higher – at 9:00 AM, S&P 500 futures were up by +37.50, Dow by +223, and NASDAQ by +191.25

Markets Around The World

  • Markets in the East closed mostly higher – Shanghai closed lower
  • European markets are higher
  • Currencies (Compared to two weeks ago):
Up Down
  • Dollar index
  • EUR/USD
  • GBP/USD
  • USD/JPY
  • USD/CHF
  • AUD/USD
  • USD/CAD
  • NZD/USD
  • INR/USD
  • Commodities (Compared to two weeks ago):
    • Energy futures are mixed
    • Precious metals are mixed
    • Industrial metals are mostly higher
    • Soft commodities are mixed
  • Treasuries (Compared to two weeks ago)
    • The 10-year yield closed at 4.630, down -27.4 basis points from two weeks ago;
    • The 30-year is at 4.806%, down -18.9 basis points
    • The 2-year yield is at 4.958%, down -9.2 basis points;
    • The 10-Year-&-2-Year spread is at -0.328, up from -0.146
    • The 30-Year-&-10-Year spread is at 0.176, down from +0.091
  • VIX
    • At 16.32 @ 8:00 AM; down from the last close; below the 5-day SMA;
    • Recent high = 22.07 on October 27; low = 15.44 on October 12; Sentiment: Risk-On

The trend and patterns in various time frames for the S&P 500:

Weekly:
  • The week ending on October 27 was a red candle with a small lower shadow and almost no upper shadow. The index has broken below an uptrend line from the October 2022 low.
    • Stochastic (9,1, 3): %K is below the %D;
    • RSI-9 has declined to near 30
  • The week was down -106.79 or -2.5%; the 5-week ATR¬† is 127.15
  • Third down week in the last five weeks and sixth in the previous ten weeks;
  • The weekly pivot point=4160.18, R1=4216.57, R2=4315.78; S1=4060.97, S2=4004.58; S1/S2 pivot levels were breached
  • Below 10-week EMA and 39-week SMA; at/below 89-week SMA
  • In Correction
Daily
  • A green candle that jumped above the previous candle¬† at the 200-day SMA; bouncing off a support at 4103.98
  • Broke below an uneven Head-&-Should pattern on September 22, and a bounce in October did not last – the 61.8% extension target near 4135.66 is achieved, the 100% extension target is near 4029.09, and the 161.8% extension target is near 3856.67
    • Stochastic (9, 1, 3): %K is above the %D
    • RSI-9 has bounced up to 50 from below 25 last week and after making a Bullish Divergence
  • Below 20-day EMA, 50-day EMA, 100-day SMA; at/below 200-day SMA;
  • In Correction
2-Hour (E-mini futures)
  • Rising since 2:00 PM on October 27; broke the sequence of lower lows and lower highs since October 17; back within a horizontal trading channel that was broken to the downside on October 25
    • RSI-21 is above 85 from below 15 on October 26 and after making a bullish divergence on October 17
    • Above EMA20, which is above EMA10 of EMA50
  • Bias: Up
30-Minute (E-mini futures)
  • Trending up since 3:30 PM on October 27; at/above a resistance zone around 4290.00
    • RSI-21 has been moving around 75 since 2:30 PM on Wednesday
    • Above EMA20, which is above EMA10 of EMA50
  • Bias: Up
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) has been moving up since 3:30 AM.
  • The Bollinger Band expanding since 4:15 AM, with the price walking up the upper band
  • Bias: Up

Previous Session

Major U.S. indices closed mostly lower on Thursday, October 26, in higher volume. The Russell 2000 closed in higher.

The major indices opened lower and traded down until the afternoon, when they bounced for an hour or so before declining and closing near the day’s low.

All but three S&P sectors – Materials, Utilities, and Real Estate – closed down. Crude oil closed down, gold closed up, and the US Treasury Yields closed down.

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