Market Diary – Tuesday, May 24, 2016

Directional Bias For The Day: To the upside

10:00 AM – S&P Futures Breakout of a Bullish Flag

S&P Futures - 6-minuteOn 6-minute time frame, eMini broke out of a down-sloping bullish flag at the NYSE open.

The flag pole started to form at 3:00 AM NY time. The low was at 2041.25. The high of 2058.00 was reached at 8:30 AM. The flag was formed till 9:30 AM and the low was at 2055.75. The height of the pole is 16.75 points. This gives a measured target of 2072.50 to the pattern.

This target goes well with the resistance levels and emerging patterns at higher time-frames.

8:00 AM – Today’s Critical Pivot Levels

S&P 500

 Level  Break Chance
Pivot  2050.29
R1  2053.33 48%
R2  2058.61 41%
R1  2061.65  42%
S1 2045.01 45%
S2  2041.97  48%
S3  2036.69  10%

Note: R2 break probability comes in picture only when R1 is broken. So are the probabilities calculated for R3, S2 and S3.


The market stayed within a trading range. S&P was bounded by 2055.48 and 2049.06 for most of the day. It collapsed in the last hour to break day’s low and close at 2048.33. However, based upon the price-patterns on higher time frames, day’s price action, technical indicators and lack of any significant economic report, this session-end drop was not as bearish as it indicates.

8:00 AM – Pre-NYSE Session Open

Asian Session

The late-session decline in S&P 500 carried over to the Asian sessions marginally. The S&P futures did not decline and stayed in a very narrow range and drifted upward. The Asian bourses were mixed.

  • Shanghai Composite fell by -21.98 or -0.77%;
  • Nikkei fell by -155.84 or 0.94%;
  • Sydney and Seoul also dropped by -0.44% and -0.90% respectively
  • Hong Kong and Mumbai rose by +0.11% and +0.30% respectively.

European Session

Europe mostly gapped down at the open but then recovered quickly to get into the green for the morning session. Before NYSE open European stocks were generally up.

  • DAX was up by +1.5%; FTSE-100 by +0.95%; CAC-40 by +1.7%; Spain by +1.5%; Italy by +2.0%


  • Dollar index is trending up so was British Pound
  • Most of the other majors are trending down
  • Emerging market currencies are mixed

Treasury Yields

Yields on 30-years and 10-years treasuries are trending up pre-NYSE open. Yesterday, yields fell. If they close up today then they will form a morning star candlestick pattern. This is after a short decline though at the upper limit of down-sloping flag on daily time-frame.


  • WTI Crude is trending up for the day and also on daily timeframe.
  • NatGas is trending down; Also making an evening star candlestick formation on daily time-frame
  • Gold and Silver are down maintaining the downtrend after May 2nd high. Gold is in a trading range after breaking above a symmetrical triangle but then fell below it – a bearish signal. Silver completes a short H&S reversal pattern on daily time frame
  • Copper just completed a double-top bearish reversal formation on daily time-frame. A fall below 2.038 – the low made on May 19th – will be quite bearish
  • Bloomberg Commodity Index is trending down for the day. The daily time-frame shows that its forming an upward sloping flag since mid-January from all time lows. Despite 16% above the low, it is stll not out of the woods.
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