Market Diary – Tuesday, July 5, 2016


ES_6Min_160705_1Just before 9:00 AM, the S&P 500 futures are showing a divergence. The MACD (3, 10, 16) – the 3/10 Indicator made popular by Linda Bradford Raschke –  made a low at 3:12 AM when the price was at 2086.00. The price made lower lows at 4:42 AM and 8:00 AM but the MACD did not, though, the MACD at 8:00 AM was lower than 4:42 AM.

Directional Bias For The Day:


  • The bias is to the down side, albeit, modestly
  • Trend on 30-minute chart is up but the price is showing signs of a retracement
  • Critical support levels for S&P 500 are 2092.29-to-2089.64 and 2080.28
  • Critical resistance levels for S&P 500 are 2113.32 and 2118.23;
  • Early morning futures price action is to the down side; S&P futures are down  14.00; Dow -109.00, and NASDAQ -30.00.
  • The pressure is coming from Brexit-led action by European policy makers
  • Watch for European market till their close for clues

Before NYSE Session Open

From Stock Trader’s Almanac we learn that Dow has been up 22 times out of last 27 years on the first trading day of July. After last week, make that 23 times out of 28. The Almanac also tells us that the day after U.S. Independence day is quite volatile. The day, so far, is shaping up to be one.

Market were closed in USA on July 4th but rest of the world was trading. Previous trading day, July 1st, was an up day for U.S. indices; most of them were up for fourth day in a row.

Asian Session

The Asian bourses were mostly down on Tuesday.

  • Shanghai Composite was up by +0.60% to 3006.39; On Monday, it broke above the upper resistance of a rectangle trading range with +1.9% gain on 60% more volume; the next resistance is 3% above at 3097; Hang Seng hit the upper bound of a symmetric triangle on Monday and on Tuesday it retraced by losing -1.46%
  • Nikkei 225 declined by -0.67% on Tuesday after an up Monday; Monday was bullish engulfing candlestick and Tuesday was a Harami
  • Sydney’s S&P/ASX 200 lost -1.02% and made a Bearish Engulfing on an up Monday
  • South Korea’s Kospi declined by -0.41%, nullifying Monday’s gain
  • Sensex declined by -0.41% on Tuesday after an up Monday, which closed below the open, in the process making a three-candle Evening Star formation

European Session

In pre-US session, European stock markets are mostly down following a mostly down Monday, increasing the probability of the test of recent lows reached on June 27th.

  • DAX is down by -1.84%; on Monday it was rejected near the upper limit of June 24th gap down, making a four-day Evening Star pattern in which day 3 was bearish engulfing of day 2; STOXX 600 is down by -1.76%
  • FTSE-100 is up by +0.01% to 6523.12 following a down Monday, which almost erased previous Friday’s gain
  • CAC-40 is down by -1.83% and is making a pattern similar to DAX; Italian FTSE MIB is down by -0.56%, it completed a 3-candle evening star pattern on Monday;
  • Spanish IBEX-35 is down by -1.91% and Swiss SMI-SWX is down by -1.70%; both are making a pattern similar to that of DAX


  • U.S. Dollar index is up by +0.76 to 95.79; it is making an up-sloping flag with a high point of 96.86
  • EUR/USD is down by -8 pip and is making a down-sloping flag; a break below 1.10960 will be critical
  • GBP/USD is down by -158 pips to 1.3123 making a 30-year low earlier
  • USD/JPY is down by +63 pips (Yen is stronger); it is up against all trading partners
  • Aussie and Kiwi dollars are down for the day by -54 and -47 pips


  • WTI Crude is down by -1.48 to 47.51, within a descending triangle; Natural Gas is down by  -0.126 or -4.22%; it is making an evening star pattern
  • Gold is up by +9.80 or +0.73% to 1348.80; Silver is up by +0.197 or +1.01% to 19.785
  • Copper is down by -0.16 or -0.72% to 2.201


  • U.S. Treasury yields are down for the day;
  • 30-years is down by -74 basis points to all time low of 2.167%
  • 10-years  is down by -62 basis points to all time low of 1.394%

Pivot Levels:

S&P 500 is above its 10-D EMA and its 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 2103.19 2092.83
R1 2108.47 49% 2104.17 47%
R2 2114.00 41% 2112.08 30%
R1 2119.28 42% 2123.42 27%
S1 2097.66 45% 2084.92 46%
S2 2092.38 49% 2073.58 39%
S3 2086.85 9% 2065.67 8%

Note: The probability of a level breaking is shown above is for the current condition when 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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