Morning Notes – Thursday September 15, 2016

Directional Bias For The Day:

S&P 500 eMini Future 30-Min - 15-Sep-16 6:45 AM

  • The futures are moving higher after making a low during Asian session
  • Odds are for a down day unless some critical resistance levels are overcome – downtrend line on 30-minute being one – then odds will be for an up day
  • 4th day following a big-decline, like the one on Friday, has 64% chance of being an up-day for S&P 500; the odds drop to 40% when the 1st day is up and the next two days are down – like the present situation – after the big decline
  • Key move: Break above a downtrend line of 30-minute chart (above 2125) or break below European session low (below 2111.75)
  • Markets in Asia were mixed; China and Japan were down but Hong Kong, South Korea, India and Australia were up
  • European markets are mixed but mostly up from multi-day lows at the start of the day’s session
  • On Tuesday, at 4:00 PM, S&P future (Dec contract) closed at 2118.50 and the index closed at 2125.77 – a spread of about 7.25 points

Key Levels:

  • Critical support levels for S&P 500 are 2119.92.54, 2116.67, and 2106.97
  • Critical resistance levels for S&P 500 are 2128.79, 2138.81 and 2150.47
  • Pre-NYSE session open, futures price action is to the upside; at 7:00 AM, S&P 500 futures was up by +7.50, Dow was up by +59 and NASDAQ was up by +16.25

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
  • 38.2% retracement from last low is 2116.59 and is  not breached
2-Hour (e-mini future)
  • Down trend since Tuesday afternoon high of 2156.00 – lower highs and lower lows
  • Touched 76.8% retracement of the bounce from big decline
  • 14-period RSI is below a downtrend line but getting near it
30-Minute (e-mini future)
  • Lower high / lower lows
  • Below downtrend line from Tuesday’s afternoon high (but nearing it from lows)
  • Rising since making low at 10:00 PM on Wednesday
  • Divergence in 14-period RSI

Before NYSE Session Open

S&P 500 Daily - 14-Sep-16Wednesday was an up and down day. Major U.S. indices climbed during the morning session but the lost the steam and closed near the lows. NASDAQ Composite was the only major index that advanced. Consumer Discretionary, Technology, Utilities and Health Care sectors gained in the S&P 500 and others declined.

On Wednesday:

Up Down Last Notes
S&P 500   -1.25 or -0.1%  2125.77
  • Near doji finish
  • Breached Tuesday’s low
  • Did not breach Monday’s low and the 38.2% retracement from last low is 2116.59
Dow Jones Industrial Average   -31.98 or -0.2% 18034.77
  • Breached Monday’s low
  • Volume was at the same level as that on Monday & Tuesday but less than Friday’s volume
NASDAQ Composite  +18.52 or +0.4%   5173.77
  • Finding resistance at previous rectangle trading range that it broke below on Friday
Russell 2000    -0.73 or -0.1% 1211.59
  • Did not breached Tuesday’s low
  • Next swing low is at 1198.73
Dow Jones Transportation Average    -16.51 or -0.2% 7755.40
  • Breached Tuesday low
  • Volume 21% less than Tuesday
  • Next swing low is at 7622.92
VIX  +0.29 or +1.6%   18.14
  • Closed below open though S&P 500 had opened near previous day’s close but closed lower

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