Morning Notes – Thursday September 22, 2016

Directional Bias For The Day:

S&P 500 eMini Futures - 22-Sep-16 6:00 AM

  • The futures are up with a new leg starting in early European session
  • Odds are for a follow-through on Wednesday’s rally, however further upside from current levels are limited
  • Key levels for eMini futures: break above 2174 for bulls and break below 2152 for bears
  • Markets in the East were mostly up – Japan was closed
  • European markets are up and are regaining the ground lost after September 9 but are not at the level pre decline
  • On Wednesday, at 4:00 PM, S&P future (Dec contract) closed at 2155.25 and the index closed at 2163.12 – a spread of about 8.00 points

Key Levels:

  • Critical support levels for S&P 500 are 2152.68, 2146.76 and 2139.57
  • Critical resistance levels for S&P 500 are 2169.08, 2177.49 and 2181.03
  • Pre-NYSE session open, futures price action is to the up side; at 7:00 AM, S&P 500 futures were up by +6.25, Dow were up by +56.00 and NASDAQ 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 remains under pressure
  • Wednesday was a large-range day with 1.1% gain
  • Price got back above the resistance posed by the lower limit of a rectangle trading range that was broken on September 9
  • Price crossed above 10-day EMA
  • 38.2% retracement from last low is 2116.59 and is  not breached
2-Hour (e-mini future)
  • Broke above a resistance level; made an ascending triangle pattern
  • Broke above a rectangle trading range with the triangle
  • Higher high and higher lows since 10:00 PM on September 22
30-Minute (e-mini future)
  • Broke above a rectangle trading range post-FOMC statement;
  • Price stayed sideways from NYSE close to early European session before rallying again
  • The 100% target of the rectangle is met the next target is 161.8%, which is near 2174

Before NYSE Session Open

S&P 500 500 - 21-Sep-16Federal Reserve of Chair Janet Yellen, as expected,  did not shock the investing world but the market reacted as if a heavy load is lifted from its shoulders and it rose.

On Wednesday, major U.S. indices gained more than 1.0% after retreating from day’s high, which was almost 1.0% above Tuesday’s close, to break even just before the FOMC statement. In the process, S&P 500 and Dow Jones Industrial Average regained the rectangle trading box that they broke below on September 9. NASDAQ Composite still remains the best looking chart and it broke above the rectangle congestion box.


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