Morning Notes – Thursday September 29, 2016

Directional Bias For The Day:

S&P 500 eMini Futures 29-Sep-16 8:00 AM

  • The futures are drifting lower since 1:30 AM high of 2167
  • Second to last trading day in September is 57% bullish for S&P 500 – down three out of last six years
  • Odds are for a down day
  • Key levels for eMini futures: break above 2164, 7:30 AM high, for bulls and break below 2155 for bears
  • Markets in the East were mostly up except for Mumbai, which declined -1.6%
  • European markets are mostly up but sharply down from early-session high
  • On Wednesday, at 4:00 PM, S&P future (Dec contract) closed at 2163.75 and the index closed at 2171.37 – a spread of about 7.50 points

Key Levels:

  • Critical support levels for S&P 500 are 2165.89, 2157.97 and 2151.79
  • Critical resistance levels for S&P 500 are 2173.75, 2179.99 and 2184.94
  • Pre-NYSE session open, futures price action is to the downside; at 8:45 AM, S&P 500 futures were down by -3.75, Dow by -29.00 and NASDAQ is down by -9.00

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 followed through Tuesday’s bullish engulfing candle
  • Back within the rectangle trading range that was once broken on September 9
2-Hour (e-mini future)
  • Sequence of Higher high and higher lows since 10:00 PM on September 22 not broken; break above 2172.75 will extend it
  • Within this, another higher high and higher low sequence since double bottom at 8:00 AM on September 27
30-Minute (e-mini future)
  • Drifting down since 1:30 AM
  • Price at the broken downtrend line from above and previous resistance turned support of September 28 4:00 AM high
  • Higher high and higher low since the double bottom of 9:00 AM September 27

Before NYSE Session Open

S&P 500 28-Sep-16On Wednesday, major U.S. indices followed through on large gain on Tuesday. In the process, they closed the gap formed on Monday.

Dow Jones Industrial Average and S&P 500 are back in the rectangle trading zone that they are breaking below. NASDAQ Composite got back above its similar congestion area and Russell 2000 is continuing its upward move.