Market Diary – Thursday August 4, 2016

Directional Bias For The Day:

ES_2Hr_160804_1

  • Higher probability for a range bound day with an upward pressure
  • On 2-hour chart, S&P 500 future is bouncing off the lower limit of a rectangle trading range and has broken above a down trend line since Aug 1st high
  • Critical support levels for S&P 500 are 2156.30, 2147.58 and 2136.62
  • Critical resistance levels for S&P 500 are 2170.20 and 2178,48
  • Early morning futures price action is slightly to the upside; at 8:30 AM, S&P 500 future was up by +2.00, Dow was up by +29.00 and NASDAQ was unchanged
  • A day before the U.S. NFP report

Before NYSE Session Open

SPX_2Hr_160803_EoDMajor US indices were mostly up on Wednesday and most of them made a harami pattern. S&P 500 gained +6.76 or +0.3% and made a green-harami candle within a large red candle.. On intraday time frames it is making a broadening formation, which is like a triangle which is made backwards. On Wednesday, it first broke below the pattern and then came back up within it. It is still not clear which way this will break, though it has more bearish implication, albeit short-term, than bullish.

Dow Jones Industrial Averages broke its streak of seven down days and gained +41.23 or +0.2% just above a support level. NASDAQ Composite gained +22.01 or +0.4% and it too made a harami candle and recovered half of the points lost on Tuesday. Russell 2000 recovered two-third of the loss on Tuesday. It was up by +10.38 or +0.9%.

Asian Session

The Asian bourses were mostly up on Thursday.

  • Shanghai Composite was up by +3.97 or +0.13% to 2982.46; it continued its bounce off support, which was a prior resistance
  • Hang Seng was up by +92.11 or +0.43% to 21832.23; it is above the high of Wednesday and is trying the fill the gap-down
  • Nikkei 225 gained +171.78 or +1.07% to 16254.89; it is at high of Wednesday, which is the lower limit of the gap-down
  • Sydney’s S&P/ASX 200 was up by +10.10 or +0..18% to 5475.80; it closed near the lows of the day but above the open
  • Sensex was up by +16.86 or +0.06% to 27714.37; it too closed at the lows and also below open
  • South Korea’s KOSPI gained +6.25 or +0.26% to close at 2000.03

European Session

In pre-US session, the European stock markets are mostly up.

  • DAX is up by +39.43 or +0.39% to 10209.64; it gapped up at the open but is near the lows of the day so far
  • FTSE-100 is up by +96.78 or +1.46% to 6731.18; it made a spinning doji on Wednesday
  • CAC-40 is up by +0.3% to 4335.02 but is below the open for the day
  • Spanish IBEX is up by +1.37% to 8376.80
  • Italian FTSE MIB is up by +0.44% to 16200.91;
  • Swiss SMI-SWX is up by +0.36% to 7982.31;
  • STOXX-600 is up by +0.50% to 337.27

Currencies

  • U.S. Dollar index is up by +0.140 to 95.665;
  • EUR/USD is down by -4.1 pips to 1.11438;
  • GBP/USD is down by -182.0 pips to 1.3137;
  • USD/JPY is down by -5.3 pips (Yen is stronger) to 101.206;

Commodities

  • WTI Crude is down by -0.20 or -0.49% to 40.61;
  • Natural Gas is up by +0.28% to 2.847
  • Gold is up by +4.10 or +0.30% to 1368.80; Silver is down by -0.151 or -0.74% to 20.320
  • Copper is down by -1.57% to 2.1640

Yields

  • U.S. Treasury yields are down for the day so far
  • 30-year yield is down -3.5 basis points to 2.258% and 10-year is down by -3.1 basis points to 1.511%

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 2160.05 2153.50
R1 2167.53 48% 2161.75 47%
R2 2171.28 41% 2166.50 31%
R1 2178.76 44% 2174.75 29%
S1 2156.30 45% 2148.75 46%
S2 2148.82 48% 2140.50 38%
S3 2145.07 10% 2135.75 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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