Morning Notes – Monday October 17, 2016

Directional Bias For The Day:

S&P 500 eMini Futures 17-Oct-16 8:00 AM

  • The futures are down but off the lows
  • Odds are for a down day
  • Key levels for eMini futures: break above 2128.75, for bulls and break below 2118.00, the low of 5:00 AM, for bears
  • Markets in the East were mostly down, except for Tokyo and Seoul
  • European markets are mostly down but off the lows
  • On Friday, at 4:00 PM, S&P future (Dec contract) closed at 2127.00 and the index closed at 2132.98 – a spread of about 6.00 points; futures closed at 2127.00 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 2142.45, 2149.19 and 2161.56
  • Pre-NYSE session open, futures price action is to the downside; at 8:45 AM, S&P 500 futures were down by -2.75, Dow by -21.00 and NASDAQ by -10.25

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
  • In danger of making a small bearish ABCD pattern; a break below 2119.12 will complete it with a target near 2104 level
  • Uptrend remains under pressure; need to rise above 2179.99 to relive the pressure
  • At the previously broken down trend line;
  • Closed at the low of the day, which, due to a relatively large upper-tail and no lower-tail, looks like a shooting star, though the body is 70% of the upper tail
  • 20-day EMA crossed below 50-day EMA on October 13
2-Hour (e-mini future)
  • Downtrend since 10:00 AM on September 22 – mostly lower lows and lower highs; advance above 2143.25 will break this sequence
  • Bounce from October 13, 8:00 AM low turned down at 2143.25 at prior support-turned-resistance level
  • Possible emergence of a right-shoulder of an inverse head-and-shoulder pattern
30-Minute (e-mini future)
  • Down trend since 10:00 AM on October 14
  • At the 78.6% Fibonacci retracement level of the rally from 10:00 AM October 13 low of 2107.75 to October 14 high

Before NYSE Session Open

S&P 500 14-Oct-16On Friday, major U.S. indices closed near the lows after a gap-up open and early trading gains.

Dow Jones Industrial Average stayed above the lower limit of the gap, which is at junction of October 13 high and the last hour of low on October 12. S&P 500 and NASDAQ Composite closed their respective gaps. Russell 2000 turned back a October 13 9:30 AM high, which is also the lower limit of a gap-down open.

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