Morning Notes – Wednesday September 14, 2016

Directional Bias For The Day:

S&P 500 eMini Futures - 14-Sep-16 6:00 AM

  • The futures are moving sideways since NYSE session close on Tuesday
  • Odds are for a sideways to an up day
  • 3rd day following a big-decline, like the one on Friday, has 61% chance of being an up-day for S&P 500
  • Key move: Break above 55 for 14-Period RSI on 30-minute chart
  • Futures are sideways since Asian session on Sunday (U.S. time) after falling more in the after-market trading post-NYSE close on Friday
  • Markets in Asia were mixed; China, Japan and Hong Kong were modestly down but India and Australia were up
  • European markets are mixed but mostly up for the first time in 4-5 days
  • On Tuesday, at 4:00 PM, S&P future (Dec contract) closed at 2119.50 and the index closed at 2127.02 – a spread of about 7.50 points

Key Levels:

  • Critical support levels for S&P 500 are 2121.54, 2116.67, and 2106.97
  • Critical resistance levels for S&P 500 are 2135.68, 2150.47 and 2157.62
  • Pre-NYSE session open, futures price action is slightly to the upside; at 6:45 AM, S&P 500 futures was up by +2.25, Dow was up by +15 and NASDAQ was up by +9.25

The trend and patterns on various time frames for S&P 500 are:

  • Up trend since Feb 08, 2016
  • Current uptrend under pressure
  • Fallen below an up-trending 10-week SMA
  • Up trend since Feb 08, 2016 with one pullback; broke out of a 2-year trading range in July, 2016
  • Last swing low, 1991.68, was reached on June 27, 2016
  • Uptrend under pressure
  • Price back at 50-day EMA after a dip below
  • Gave back all of the gains of the piercing candle following a range expansion red candle
  • 38.2% retracement from last low is 2116.59 and was not breached
2-Hour (e-mini future)
  • Sideways since Tuesday afternoon between 61.8% and 76.8% retracement of the bounce from big decline
30-Minute (e-mini future)
  • Low for the day touched 2112.25, which was 76.8% of the retracement of the bounce from the lows of 2100.25 to the high of 2156.00
  • Since Asian session 14-period RSI is finding a ceiling near 50;

Before NYSE Session Open

S&P 500 Daily - 13-Sep-16 S&P Volatility Index Daily - 13-Sep-16

Tuesday was almost a mirror opposite of Monday. Major U.S. indices gapped lower at the open and stayed lower. However, not all behaved in similar manner. Big caps were helped by the performance of  $AAPL, which gained 2.4% on a down day.

On Tuesday:

Up Down Last Notes
S&P 500   -32.02 or -1.5%  2127.02
  • Gave back 103% of Monday’s gain
  • Did not breach Monday’s low and the 38.2% retracement from last low is 2116.59
Dow Jones Industrial Average    -258.32 or -1.4% 18866.75
  • Gave back 108% of Monday’s gain
  • Did not breach Monday’s low
  • Volume was at the same level as that on Monday but less than Friday’s volume
NASDAQ Composite    -56.64 or -1.1% 5155.25
  • Made a small red-harami candle pattern within a larger green candle – hinting indecision
  • Gave back 66% of Monday’s gain
Russell 2000    -23.55 or -1.9% 1212.32
  • Gave back all of Monday’s gain and then some (141%)
  • Breached Monday’s low
  • Next swing low is at 1198.73
Dow Jones Transportation Average    -153.99 or -1.9% 7771.91
  • Gave back all of Monday’s gain and then some (149%)
  • Breached Monday’s low
  • Next swing low is at 7622.92
VIX  +2.69 or +17.7%   17.85
  • Closed above Friday’s level but well below Monday’s high
  • Monday’s close was below gap-higher open
  • Made a green harami candle within a large red candle

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