Market Diary – Thursday, June 2, 2016

10:15 AM: Futures Fell Off The Bed At Open

eMini S&P 500 - 6-minuteFutures were drifting down before the 9:30 AM NYSE open. They tried to hold the fort for 15-minutes before giving up and plunging to 2086.75, near support by 9:50 AM. Since then, futures are trying to bounce but the prior broken support of 2091.25 is acting as a resistance along with a downtrend line on 6-minute chart.

The down trend-line on 14-period RSI has broken to the upside, indicating increasing momentum. Usually a break in the trend-line of RSI precedes the break in the trend-line on price. Also, the RSI made a negative divergence with price. A break above 2093.50, will increase the chance of test of Wednesday’s high of 2099.25 for S&P 500 futures.

9:15 AM: Delicately Placed – European Connection

Mario Draghi’s press conference in Brussels and the conclusion of OPEC meeting in Vienna are putting pressure on futures. Post OPEN meeting crude oil is down -1.00 and S&P 500 futures are down -9.75 points.

ES_30_160602_2 ES_D_160602_2

The futures are in the middle of a rectangle trading box. The support is at 2083.25, Wednesday’s low. If S&P 500 closed below the Wednesday low 2085.10 then it would change the tone of the market.

9:00 AM:  S&P Futures Testing Support

The S&P 500 Futures are testing the overnight lows of 2091.25, however, that may change when the NYSE open at 9:30 AM.

The Challenger Job Cuts y/y came out to -26.5%. Unemployment Claims came inline at 267K and the AD Non-Farm Employment Changes was 173K, as forecasted.

ADP_NFP_160602 Unempl_Claims_160602

8:45 AM: Draghi Presser Moves Futures

ES_6_160602_1 The ECB rate decision of 7:45 AM, ADP Non-Farm Employment Change of 8:15 and Unemployment Claims did not move the future but the straw that broke the camel’s back was Mario Draghi’s press conference.

ECB raised 2016 growth forecast to 1.6% vs. its March projection of 1.4%.

During the press conference:

  • S&P futures dropped to 2093.25, which is 4.75 points below Wednesday’s close, and Dow futures fell by -40
  • Yields are positive
  • FTSE-100, DAX and CAC-40 turned negative
  • EUR/USD gained 50 pips in five-minutes.

ES_30_160602_1A break by S&P 500 Futures below the support of 2091.25, the overnight lows, will be interesting. However, if past few days’ action is any indication, that support-break may not last too long. The critical piece of information still remains the U.S. Non-Farm Payroll to be released on Friday.

Directional Bias For The Day:

  • Odds are good for the market to stay in a range with modest upward bias
  • Watch the opening range and first hour of trading for clues
  • Critical resistance level for S&P 500 – 2103.48

Before NYSE Session Open

Asian Session

The Asian bourses were mixed.

  • Shanghai Composite rose in the later half to close up by +0.40%; Hang Seng had similar move and it closed up by +0.47%
  • Nikkei 225 gapped down to lose -2.32% for the day after Prime Minister Shinzo Abe held back a widely-expected fiscal stimulus package; now the next support is the uptrend line forming the lower-limit of a up-sloping flag
  • Australian S&P/ASX broke below a rectangle trading range after declining -0.83%;
  • India’s Sensex gained +0.48 to continue its uptrend; on 60-minute it is forming a rectangle trading box; today’s candlestick formation was bullish engulfing, which nullifies Wednesday’s shooting star candlestick.

European Session

In pre-US session, European stock markets are mixed.

  • DAX is almost unchanged at +0.05% though the short-term downside pressure still exits on daily timeframe; it is at the support level formed by May 25th gap-up
  • STOXX-600 is up +0.22% after reversing an earlier 0.2% loss
  • CAC-40 down by -0.06%; FTSE-100 is up by +0.36%; Italian FTSE MIB is up by +1.00%; Spanish IBEX-35 is up by +1.43% making a bullish engulfing day and Swiss SMI-SWX by +0.08%


  • US Dollar index is down by -0.146 to 95.31; it is still facing downward pressure; next support is between 95.075 to 94.925
  • USD/JPY is down by -504 pips to 108.956 (means Yen is stronger against USD); it has broken below the lower bound of an up-sloping bearish flag; it is acting more as a risk-off trade than anything else
  • EUR/USD is up and is at the upper limit of a down-sloping flag; British Pound is also marginally up
  • Aussie and Kiwi dollars are down slightly
  • The MSCI Emerging Markets Currency Index added 0.1 percent as the ruble advanced 0.3 percent, buoyed by oil’s gains


  • WTI Crude is down by -0.10 to 48.91; it broke below a symmetrical triangle; on Wednesday, it touched 47.75 near the support level of 47.64 to 46.73 range
  • Natural Gas is slightly down after breaking above a resistance of 2.315 on Wednesday; next resistance is January 8th high of 2.480.
  • Gold and Silver are up marginally; they are forming a down-sloping flag; they were up at this time on Wednesday but closed the in red
  • Copper is down by 0.095 to 2.0635; it is trying to test the recent low of 2.038, reached on May 19th.


  • Japan’s 10-year sovereign debt drew the strongest demand in almost two year; it has negative yields
  • U.S. 30-years yields are down by -0.002% after falling on Wednesday; U.S. 10-year yields are up by +0.012% following a down day; both are forming triangles on daily timeframe


Though on Wednesday, major indices did not gain much, the day’s action was much more positive as market rose after making lows at NYSE session open..

Pivot Levels:

S&P 500 is above 10-D EMA; 10-EMA is above 20-D EMA; 20-D EMA is trending above 50-D EMA since March 9, 2016.

S&P 500 Cash eMini Futures
 Daily Level Break
Level Break
Pivot 2095.13 2093.50
R1 2105.17 61% 2103.75 56%
R2 2111.00 42% 2109.50 31%
R1 2121.04 44% 2119.75 22%
S1 2089.30 36% 2087.75 35%
S2 2079.26 35% 2077.50 27%
S3 2073.43 24% 2071.75 23%

Note: The probability of a level breaking is shown above is for the current condition when 1) the price is above 10-D EMA; 2) 10-D EMA is above 20-D EMA; and 3) 20-D EMA is above 50-D EMA. R2 break probability comes in picture only when R1 is broken. So are the probabilities calculated for R3, S2 and S3

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