Morning Notes – Wednesday October 19, 2016

Directional Bias For The Day:

S&P 500 eMini Futures 18-Oct-16 6:00 AM

  • The futures are unchanged but up from 3:30 AM lows of 2126.50
  • Odds are for a range bound day
  • Key levels for eMini futures: break above 2135.50, the high of 10:00 PM, for bulls and break below 2126.50 for bears

Markets Around The World

  • Markets in the East were mixed – Hong Kong and Mumbai were down and others up
  • European markets are mostly down, Spain being an exception
  • Dollar index is down so is USD/JPY; EUR/USD and GBP/USD are up
  • Oil is up; NatGas down; Precious metals are up but industrial are down

Key Levels:

  • Critical support levels for S&P 500 are 2135.49, 2124.43 and 2114.74
  • Critical resistance levels for S&P 500 are 2144.18, 2149.19 and 2161.56
  • Pre-NYSE session open, futures price action is almost unchanged; at 6:30 AM, S&P 500 futures were up by +0.75, Dow by +12.00 and NASDAQ is down by -3.75
  • On Tuesday, at 4:00 PM, S&P future (Dec contract) closed at 2133.00 and the index closed at 2139.60 – a spread of about 6.50 points; futures closed at 2132.00 for the day

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
  • Turning down from the previously broken down trend line after a test
  • 20-day EMA crossed below 50-day EMA on October 13
  • Need to rise above 2149.19 for short term up move
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 but uptrend continues
  • Possible emergence of a right-shoulder of an inverse head-and-shoulder pattern; a break above 2143.25 will trigger it
30-Minute (e-mini future)
  • Down trend since 10:00 AM on October 14; Uptrend since 10:00 AM October 13
  • Turned up in between the 61.8% and 78.6% Fibonacci retracement level of the rally from 10:00 AM October 13 low of 2107.75 to October 14 high
  • A symmetric triangle being formed

Before NYSE Session Open

S&P 500 17-Oct-16On Tuesday, major U.S. indices gapped-up at the open. Most made a high in the first-half of trading and did not touch the gap. They also made day’s low in the first hour of trading. S&P 500 and Russell 2000 made an attempt mid-day to take-out the highs but failed. NASDAQ Composite broke above the high before turning back. Dow Jones Industrial Average and Dow Jones Transportation Average did not challenge the highs.

Indices also made a larger upper tail, which means that they closed off the highs. DJIA and S&P 500 closed below day’s mid-range but above the open. NASDAQ closed below the open and in the lower quarter. Transports closed at the lows and below Monday’s close. Russell closed in the upper half.

The overall price-action indicates that there is no strong conviction in the market but bearish and bullish forces are trying toe assert themselves, which means that the elevated volatility will continue.

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