Market Diary – Wednesday August 3, 2016

Directional Bias For The Day:

ES_4Hr_160803_1

  • Higher probability for a down day
  • On 4-hour chart, S&P 500 future is knocking on the lower limit of rectangle trading range after breaking below a narrower trading range on Tuesday
  • Critical support levels for S&P 500 are 2147.58, 2136.62 and 2123.72
  • Critical resistance levels for S&P 500 are 2159.47, 2168.96 and 2173.31
  • Early morning futures price action is slightly to the downside; at 8:30 AM, S&P 500 future was down by -3.25, Dow was down by -31.00 and NASDAQ was down by -8.75

Before NYSE Session Open

SPX_4Hr_160802_EoDMajor US indices were down on Tuesday. S&P 500 lost -13.81 or -0.6% and on 4-hour timeframe, it is forming a broadening formation, which is like a triangle backwards. It is usually a bearish formation and occurs after a rally. The index is at the lower limit of the formation and the price action in the near future will give us more clues whether the pattern will complete of something else will emerge

NASDAQ_D_160802_EoDDow Jones Industrial Averages extended its streak of down days to seven by losing -90.74 or -0.5%. Since making an all time high on July 20th, it has been down eight out of nine trading days. It is also at a support level, which was the resistance earlier. The critical support for Dow is 18247.79 and critical resistance is 18403.65. On Tuesday it closed at 18313.77, which is only 1.65% from all time high.

NASDAQ Composite lost -46.47 or -0.9%, it formed an evening star, a 3-day bearish pattern. Russell 2000 lost -16.78 or -1.4%.

Asian Session

The Asian bourses were mostly down, except for Chinese market, on Wednesday.

  • Shanghai Composite was up by +7.18 or +0.24% to 2978.46; it continued its bounce off support, which was a prior resistance
  • Hang Seng gapped down at open and then traded in a narrow range before closing down by -390.02 or -1.76% to 21739.12
  • Nikkei 225 lost -308.34 or -1.88% to 16083.11; the next support is the gap of July 12th
  • Sydney’s S&P/ASX 200 lost -74.80 or -1.35% to 5465.70; it is heading toward the support of 5427.70, the prior resistance
  • Sensex was down by -284.20 or -1.02% to 27697.51; it is at a support
  • South Korea’s KOSPI gapped down and lost -24.24 or -1.20% to close at 1994.79

European Session

In pre-US session, the European stock markets are mostly down, but not as much as they were on Tuesday by this time.

  • DAX is down by -10.30 or -0.10% to 10134.04;
  • FTSE-100 is down by -12.61 or -0.19% to 6632.79; it is at a support of 6616.51
  • CAC-40 is down by -0.60% to 4302.18;
  • Spanish IBEX is down by -0.35% to 8248.80;
  • Italian FTSE MIB is down by -0.16% to 16073.27;
  • Swiss SMI-SWX is down by -0.36% to 7982.31;
  • STOXX-600 is down -0.18% to 334.85

Currencies

  • U.S. Dollar index is up by +0.332 to 95.320;
  • EUR/USD is down by -38.7 pips to 1.11828;
  • GBP/USD is down by -28.0 pips to 1.3322;
  • USD/JPY is up by +25.0 pips (Yen is weaker) to 101.157;

Commodities

  • WTI Crude is up by +0.22 or +0.58% to 39.74;
  • Natural Gas is up by +2.12% to 2.791
  • Gold is down by -4.50 or +0.74% to 1368.10; Silver is down by -0.116 or -0.56% to 20.585
  • Copper is down by -1.15% to 2.1835

Yields

  • U.S. Treasury yields are up for the day so far
  • 30-year yield is up +0.2 basis points to 2.289% and 10-year is up by +0.3 basis points to 1.540%

Pivot Levels:

S&P 500 is below its 10-D EMA, 10-D EMA crossed below 20-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
Chance
Level Break
Chance
Pivot 2158.77 2155.08
R1 2168.96 48% 2168.67 47%
R2 2180.89 41% 2184.58 31%
R1 2191.58 44% 2198.17 29%
S1 2146.34 45% 2139.17 46%
S2 2135.65 48% 2125.58 38%
S3 2123.72 10% 2109.67 7%

Note: The probability of a level breaking is shown above is for the current condition when the price is below 20-D EMA, 10-D EMA is below 20-D EMA and 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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