Morning Notes – Friday October 14, 2016

Directional Bias For The Day:

S&P 500 eMini Futures 14-Oct-16 6:00 AM

  • The futures are up following gap-up open in European markets
  • Odds are for an up day
  • Key levels for eMini futures: break above 2139.50, October 12 high of 2:00 PM, for bulls and break below 2128.75, the low of 9:30 PM on October 13, for bears
  • Markets in the East were mostly up, except for Sydney
  • European markets are mostly up after gap-up open
  • On Thursday, at 4:00 PM, S&P future (Dec contract) closed at 2126.25 and the index closed at 2132.55 – a spread of about 6.25 points; futures closed at 2126.25 for the day

Key Levels:

  • Critical support levels for S&P 500 are 2130.45, 2114.74 and 2105.04
  • Critical resistance levels for S&P 500 are 2137.74, 2145.36 and 2151.94
  • Pre-NYSE session open, futures price action is to the upside; at 6:45 AM, S&P 500 futures were up by +12.00, Dow by +105.00 and NASDAQ is up by +25.75

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
  • Broke below the down trend line;
  • The low for the day coincided with 38.2% Fibonacci retracement from June low and the November 215 high and June 2116 high
  • The day’s candlestick formation is near doji with long lower tail and short upper tail
2-Hour (e-mini future)
  • Downtrend since 10:00 AM on September 22 – mostly lower lows and lower highs
  • AT the 50-bar EMA after rising from below
  • October 13, 8:00 AM low, which started the reversal, coincided with the 10:00 PM low on September 14
  • The bounce is at the low of 8:00 PM on September 26
30-Minute (e-mini future)
  • Down trend since 9:30 AM on October 10
  • Made first higher high  and higher low since 10:00 AM low on October 13
  • Above 20-bar EMA and 50-bar EMA
  • At the broken uptrend line after rising from below; may act as a resistance

Before NYSE Session Open

S&P 500 13-Oct-16On Thursday, major U.S. indices staged reversals mid-day. All gapped-down at the open and started reversals at the end of first half-hour of trading. After that, their trajectories varied slightly, though their respective bounces faced the resistance in the last hour of day’s trading.

S&P 500 and Dow Jones Industrial Average found resistance at the upper end of their gaps, which was the low of the last half-hour, i.e. 3:30 PM, of trading on October 12. Their gap was above the low of October 11, though they both breached that low in the first-half hour of trading.

NASDAQ Composite’s gap was below the low of October 11 and it found resistance at that level during its bounce. Russell 2000 did not bounce to the upper limit of the gap. Dow Transportation Average closed the gap and logged a gain for the day.


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