A Holding Pattern

Historically, the day after Memorial Day has been good for Dow Jones Industrial Averages. It was up 21 out of last 29 years. Now make that out of 30 years. After a big week it was expected for the market to take a breather, even though the pre-open bias was still to the upside. However, the market chose to take a breather, but it decided that very late in the day to. For majority of the day, the market was drifting down but turned around at 2:30 PM and closed down by only 2.25 points.

Dow Jones Industrial Averages - Daily S&P 5oo - Daily

S&P 500 is very near a resistance level, so it is not uncommon for it to hesitate. However, the price action of Dow Jones Industrial Averages is of more concern as it made a bearish engulfing candlestick formation.

The day’s action was not smooth. Late on Friday Mar 27th, futures broke through an ascending triangle brushing aside the Fed-rate hike concern. On Monday U.S. markets were closed due to Memorial Day holiday but S&P 500 futures still traded in overseas markets but the volume was not large and they carved out a trading range.

eMini S&P 500 Futures - 6-minutes eMini S&P 500 Futures - 30-minutes

Tuesday rolled around with market eagerly awaiting the ECB rate decision and U.S. Non Farm Payroll numbers. The early action was for S&P 500 to break down from through a support. Then the futures drifted down to 2086 before finding some support. In the last hour they made a rally to get back to even for the day before the last two minutes knocked off 4 points.

Still, the day’s close had more positive tone than the mid-day trading. Not much damage has been done and the upward bias still remains though the clarity will be achieved only later in the week after the ECB meeting and Non-Farm Payroll numbers.

Chinese Economic Data

Later Tuesday evening (morning in China), Chinese PMI data will be released that may have some impact on S&P futures. Manufacturing PMI is expected to be 50 and Caixin Manufacturing PMI is forecast to be 49.3. Here are how their (and non-manufacturing PMI) graphs look.
China_CaixinMfgPMI_160531 China_MfgPMI_160531 China_NonMfgPMI_160531



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