Monday, November 5, 2018

11/05/2018 - **Overnight Markets and News**

**Overnight Markets and News**

*Dec E-mini S&Ps (ESZ18 +0.03%) this morning are up +0.17% as the market looks to U.S. mid-term elections tomorrow.  European stocks are up +0.36% and GBP/USD is up +0.13 % at a 2-week high on optimism a Brexit deal will soon be reached after a Sunday report from the London Times said that UK Prime Minister May had secured concessions from Brussels to let her keep all of the UK in a customs union with the European Union.  Optimism over a potential U.S.-China trade deal receded after Chinese President Xi Jinping, speaking at a Shanghai trade show Sunday night, failed to outline any new proposals that would suggest there was an impending resolution to the U.S.-China trade conflict.  Energy stocks are weaker with Dec WTI crude oil (CLZ18 -0.29%) down -0.33% to a 6-3/4 month low as fears of a global crude shortage ease.  Renewed U.S. sanctions on Iran begin today, although the U.S. will allow eight countries to continue buying crude from Iran.  Gains in European stocks were limited after the Eurozone Nov Sentix investor confidence fell -2.6 to a 2-year low of 8.8.  Asian stocks settled lower: Japan -1.55%, Hong Kong -2.08%, China -0.41%, Taiwan -0.17%, Australia -0.53%, Singapore -1.79%, South Korea -0.91%, India -0.17%.  Asian equity markets fell back as enthusiasm for an imminent U.S.-China trade deal declined after White House economic adviser Kudlow downplayed the potential for a quick deal and Chinese President Xi Jinping refrained from mentioning a deal in a speech he made on Sunday night.

*The dollar index (DXY00 +0.05%) is up +0.06%.  EUR/USD (^EURUSD -0.16%) is down -0.18%.  USD/JPY (^USDJPY +0.06%) is up +0.05%.

*Dec 10-year T-note prices (ZNZ18 +0-020) are up +3.5 ticks.

*The Eurozone Nov Sentix investor confidence fell -2.6 to a 2-year low of 8.8, weaker than expectations of -1.6 to 9.8.

*The UK Oct Markit/CIPS services PMI fell -1.7 to a 7-month low of 52.2, weaker than expectations of -0.6 to 53.3.

*The China Oct Caixin services PMI fell -2.3 to 50.8, weaker than expectations of -0.3 to 52.8 and the slowest pace of expansion in 13 months.

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**U.S. Stock Preview**

*Key U.S. news today includes: (1) final-Oct Markit U.S. services PMI (expected -0.1 to 54.6, prelim-Oct +1.2 to 54.7), (2) Oct ISM non-manufacturing index (expected -2.5 to 59.1, Sep +3.1 to 61.6), (3) Treasury auctions $37 billion of 3-year T-notes.

*Notable S&P 500 earnings reports today include: Marriott (consensus $1.31), Occidental Petroleum (1.53), Loews (0.98), PG&E (1.14), Sysco (0.92).

*U.S. IPO's scheduled to price today: none.

*Equity conferences during the remainder of this week: MUFG Securities Energy Tour on Mon, Bank of America Merrill Lynch Future of Financials Conference on Mon-Tue, Global AI & Future Tech Conference on Tue, Robert W. Baird Industrial Conference on Tue-Thu, National Association of Real Estate Investment Trusts REIT World Convention on Wed-Thu.


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**Overnight U.S. Stock Movers**

*CME Group (CME +0.06%) was resumed at Bank of America/Merrill Lynch with a 'Buy' rating and a price target of $200.

*Starbucks (SBUX +9.70%) was upgraded to 'Buy' from 'Neutral' at Mizuho Securities USA with a price target of $75.

*Chevron (CVX +3.20%) was upgraded to 'Outperform' from 'Neutral' at Credit Suisse with a price target of $138.

*Signature Bank (SBNY -0.21%) was upgraded to 'Buy' from 'Neutral' at UBS with a price target of $138.

*Big Lots (BIG -0.51%) was rated a new 'Buy' at Bank of America/Merrill Lynch with a price target of $56.

*Ansys (ANSS +1.40%) was upgraded to 'Buy' from 'Hold' at Benchmark Company LLC with a price target of $187.

*Sage Therapeutics (SAGE +6.89%) rose more than 5% in after-hours trading after its drug, Zulresso (brexanolone), won approval from an FDA advisory panel for treatment of postpartum depression.

*Consolidated Edison (ED -1.44%) was upgraded to 'In-Line' from 'Underperform' at Evercore ISI with a price target of $74.

*Under Armour (UAA +1.54%) was upgraded to 'Overweight' from 'Neutral' at Piper Jaffray with a price target of $32.

*Watts Water (WTS -0.32%) may move higher initially this morning when it reported after the close Friday Q3 adjusted EP of 99 cents, better than consensus of 96 cents.

*Arconic (ARNC -0.52%) lost 1% in after-hours trading after the NY Post reported Apollo Global Management has demanded that liabilities From the June 2019 Grenfell Tower fire be ring-fenced as a condition for any bid for Arconic.
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**Market Comments**

*Dec S&P 500 E-minis (ESZ18 +0.03%) this morning are up +4.75 points (+0.17%).  Friday's closes: S&P 500 -0.63%, Dow Jones -0.43%, Nasdaq 100 -1.47%.  The S&P 500 on Friday fell back from a 1-1/2 week high and closed lower on weakness in technology stocks, led by a 6% decline in Apple, after it forecast weaker-than-expected earnings growth and reported stagnant iPhone sales.  There was also weakness in energy stocks as crude oil prices tumbled -0.86% to a 6-3/4 month low.  Stocks were supported by hopes that the trade conflict between the U.S. and China may be resolved after President Trump said he wants to reach an agreement on trade with Chinese President Xi Jinping when both leaders meet at the G-20 summit in Argentina later this month.  Stocks were also supported by the +250,000 increase in U.S. Oct non-farm payrolls (stronger than expectations of +200,000) and by the +0.7% increase in U.S. Sep factory orders (stronger than expectations of +0.5%).

*Dec 10-year T-notes (ZNZ18 +0-020) this morning are up +3.5 ticks.  Friday's closes: TYZ8 -17.00, FVZ8 -10.50.  Dec 10-year T-notes on Friday fell to a 1-1/2 week low and closed lower on the stronger-than-expected U.S. economic data on Oct non-farm payrolls and Sep factory orders, and also on supply pressures ahead of the Nov refunding that begins Monday where the Treasury will auction $83 billion of T-notes and T-bonds.

*The dollar index (DXY00 +0.05%) this morning is up +0.061 (+0.06%), EUR/USD (^EURUSD -0.16%) is down -0.0020 (-0.18%), and USD/JPY (^USDJPY +0.06%) is up +0.06 (+0.05%).  Friday's closes: Dollar Index +0.265 (+0.28%), EUR/USD -0.0020 (-0.18%), USD/JPY +0.48 (+0.43%).  The dollar index on Friday recovered from a 1-week low and closed higher on stronger-than-expected U.S. economic data on Oct non-farm payrolls and Sep factory orders that was hawkish for Fed policy.  The dollar was also supported by the increase in T-note yields, which improved the dollar's interest rate differentials.

*Metals prices this morning are weaker with Dec gold (GCZ18 unch) -0.1 (-0.01%), Dec silver (SIZ18 -0.21%) -0.031 (-0.21%), and Dec copper (HGZ18 -1.12%) -0.026 (0.93%).  Friday's closes: Dec gold -5.3 (-0.43%), Dec silver -0.021 (-0.14%), Dec copper +0.0855 (+3.15%).  Metals on Friday settled mixed with Dec copper at a 1-1/2 week high.  Metals prices were supported by the better-than-expected U.S. economic data that is positive for industrial metals demand after Oct non-farm payrolls and Sep factory orders rose more than expected.  Industrial metals prices were also boosted by hopes that the U.S and China may resolve their trade differences, which would be positive for economic growth and industrial metals demand, after President Trump said he wants to reach a trade agreement with China at the G-20 summit in Argentina later this month.  Metals prices were undercut by the rebound in the dollar from 1-week low.

*Dec WTI crude oil prices (CLZ18 -0.29%) this morning are down -21 cents (-0.33%) at a fresh 6-3/4 month low and Dec gasoline (RBZ18 -0.64%) is -1.28 (-0.75%).  Friday's closes: Dec crude oil -0.55 (-0.86%), Dec gasoline -0.82 (-0.48%).  Dec crude oil and gasoline on Friday closed lower with Dec crude at a 6-3/4 month low.  Crude oil prices were undercut by a stronger dollar and by reduced global supply concerns after the U.S. agreed to let eight countries to keep buying Iranian crude oil on waivers even after U.S. sanctions against Iran go into effect Nov 5.  Crude oil prices were also undercut by negative carry-over from Thursday's data that showed OPEC Oct crude production rose by +430,000 bpd to a 2-year high of 33.33 million bpd.

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*PLACING TRADES*
HOW TO READ THE MARKET


OK SO IF YOU LOOK AT TODAYS SHEET YOU WILL LOOK FOR YOUR BUY/SELL SIGNALS FIRST.
THE BUY SELL SIGNAL IS LOCATED UNDER THE "POSMOM" & "NEGMOM" COLUMNS.
FOR BUYS SIGNALS YOUR LOOKING FOR EITHER A "311", "411" OR "911"
LIKEWISE FOR SELL SIGNALS.  BUY AND SELL ARE BASED ON THE POS MOM AND NEG MOM
THERE IS ALSO "11"
WHICH MEANS THAT THE MARKET IS LOCKED IN WITH EITHER BULLISH OR BEARISH MOMENTUM. THIS IS ANALOGOUS TO A CONTINUATION PATTERN IN EITHER DIRECTION.
NEXT YOU LOOK AT THE "TREND" COLUMN. IS YOU HAVE A BUY SIGNAL (AS INDICATED ABOVE) THEN YOU KNOW THAT YOU WILL BE TRADING WITH THE TREND IS THERE IS A "3","2" OR "1" IN THE TREND COLUMN.
3 IS A MATURE STAGE 3 TREND. EVERYTHING IS LOCKED IN MOMENTUM WISE. 2 IS A STAGE 2 TREND THAT IS STRENGTHENING AND WILL BECOME A STAGE 3 SOON.
 1 IS THE BEGINNING STAGE OF A TREND THAT DEVELOPING.
NEXT......IS THE MARKET TIMING. THATS WHERE THE PRICE TRIGGERS COME INTO PLAY. FOR LONGS YOU CAN ENTER @ THE "ENTRY" COLUMN OR TAKE A MORE CONSERVATIVE APPROACH (IF THE "52WK" COLUMN IS GREATER THAN THE "ENTRY" COLUMN) AND ENTER AT THE "52WK" TRIGGER.  ONCE YOU HAVE MADE YOUR DECISION YOU SIMPLY PLACE THE TICKET AND WAIT FOR THE MARKET TO COME TO YOU.
*NOTE: THERE IS A FAILSAFE BUILT INTO THE SYSTEM. EVEN WITHOUT LOOKING AT THE POS MOM & NEG MOM YOU CAN JUST USE THE PRICE TRIGGERS THEMSELVES AND ENTER A TRADE. REASON BEING IS BECAUSE IF THE PRICE TRIGGER IS HIT THE MARKET WILL MOVE IN THE DIRECTION AND TAKE YOU ALONG FOR THE RIDE!

*EXITS* - THERE ARE TWO WAYS TO DO EXITS. FIRST YOU CAN EXIT WHEN THE OPPOSITE PRICE TRIGGER IS HIT.

EXITS WORK LIKE ENTRY POINTS. YOU LET THE MARKET COME TO YOU. THE MORE CONSERVATIVE APPROACH IS TO USE THE "STOPLOSS" COLUMN AS YOUR EXIT ON LONG POSITIONS AND USE THE "ENTRY" COLUMN TO EXIT ON SHORT POSITIONS.
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