Morning Notes – Thursday October 6, 2016

Directional Bias For The Day:

S&P 500 6-Oct-16 8:30 AM

  • The futures are moving down after making a high of 2155.75 at 3:00 AM
  • Odds are for a sideways to down day
  • Key levels for eMini futures: break below 2143.00 for bears and break above 2155.75 for bulls
  • Markets in the East were mostly up; only Mumbai declined b y-0.4%
  • European markets are mostly down and made their day’s high in the first half hour of trading
  • On Wednesday, at 4:00 PM, S&P future (Dec contract) closed at 2153.00 and the index closed at 2159.73 – a spread of about 6.75 points; futures closed at 2153.25 for the day

Key Levels:

  • Critical support levels for S&P 500 are 2155.15, 2150.81 and 2144.01
  • Critical resistance levels for S&P 500 are 2163.95, 2167.77 and 2175.30
  • Pre-NYSE session open, futures price action is to the upside; at 8:45 AM, S&P 500 futures were up by +5.25, Dow by +44.00 and NASDAQ is 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; need to rise above 2187.87 to relieve the pressure
  • 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; need to rise above 2179.99 to relive the pressure
  • Wednesday was green harami candle within  Tuesday’s large red candle, which followed Monday’s red harami candlestick within Friday’s large green candle
  • An up-sloping flag is forming; a break below 2144.01 will be bearish
  • Price crossed above 10-day EMA, which is below 20-day EMA since September 9
2-Hour (e-mini future)
  • An ascending triangle is being formed since September 8 gap down
  • A symmetrical triangle being within the ascending triangle since September 22
  • Sequence of Higher high and higher lows since 10:00 PM on September 22 not broken; break below 2135.75 will do it
  • Hugging since 12:00 Noon October 4 the uptrend line from the lows of September 2; broke below it on October 4; now above it
30-Minute (e-mini future)
  • Broken above the down trend – from September 30 3:00 PM high of 2168.25 – at 10:00 AM on October 5; now retraced and is testing it on October 6 NYSE pre-session
  • Making higher highs since October 4 2:30 PM low of 2136.00
  • Broken below the uptrend line since October 4 3:00 PM low

Before NYSE Session Open

S&P 500 5-Oct-16On Wednesday, major U.S. indices gapped up at the open and stayed open for rest of the day. However, they gave back some ground in the final hour of trading. S&P 500 closed up by +9.24 but that was off 4.22 point below the day’s high at 3:00 PM.

Major indices made a green harami candlestick within a red candle of Tuesday. S&P 500 and Dow Jones Industrial Averages are hugging the lower limit of a rectangle trading range that they broke top the downside on September 9. NASDAQ Composite is staying above a horizontal channel that it broke to the upside for the second time on September 27. Dow Transportation Average is also staying above an ascending triangle but facing resistance at April high of 8149.00. Russell 2000 is staying within an up-sloping 20-day EMA and 10-day EMA.

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