Morning Notes – Wednesday September 21, 2016

Directional Bias For The Day:

S&P 500 eMini Futures - 21-Sep-16 8:00 AM

  • The futures are up since midnight after BoJ meeting
  • Wednesday after September expiry Friday is bearish for S&P 500 – 73% odds for a down day
  • The day of FOMC meeting has been bullish for the market
  • Key levels for eMini futures: break above 2146.75 for bulls and break below 2126.50 for bears
  • Markets in the East were mostly up with only India being down;
  • European markets are up after again a gap-up open
  • Odds are good or an up day.
  • On Tuesday, at 4:00 PM, S&P future (Dec contract) closed at 2131.75 and the index closed at 2139.76 – a spread of about 8.00 points

Key Levels:

  • Critical support levels for S&P 500 are 2135.91, 2131.20 and 2124.06
  • Critical resistance levels for S&P 500 are 2146.16, 2153.61 and 2157.57
  • Pre-NYSE session open, futures price action is to the up side; at 8:30 AM, S&P 500 futures were up by +6.50, Dow were up by +56.00 and NASDAQ by +19.50

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 remains under pressure
  • For the last three trading days, despite more than 1.00% intra-day price swing, the index closed at 2139.00
  • Like Tuesday, gave up 12 points gain to close by +0.64 points; End of day was weak; not surprising for the Tuesday following September expiry Friday
  • 38.2% retracement from last low is 2116.59 and is  not breached
2-Hour (e-mini future)
  • The symmetrical, which was emerging since September 12, morphed into a rectangle trading box just above the upper limit of the triangle
  • Broke the sequence of lower highs / lower lows since September 12 but it hasn’t turned into a uptrend
  • In a narrow-range since September 15 10:00 AM
30-Minute (e-mini future)
  • Within a rectangle trading box – upper limit near 2145 and lower limit near 2126
  • Near the upper limit of the box.
  • On upswing since the BoJ meeting around Midnight

Before NYSE Session Open

NASDAQ Composite - 20-Sep-16Tuesday was, like Monday, an up and down day. The promising start fizzled in the afternoon. The mid-afternoon rally also turned down during the last hour. The S&P 500, however, managed to close even for the day.

NASDAQ Composite still remains the best looking chart. It made a red-harami doji within another red candlestick near the upper limit of a rectangle trading range. Small-cap, Russell 2000, declined on Tuesday. Other major U.S indices were either up or even for the day.

They all were waiting for the FOMC meeting and Bank of Japan meeting on Wednesday.

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