Morning Notes – Tuesday October 25, 2016

Directional Bias For The Day:

S&P 500 eMini Future 24-Oct-16 6:00 AM

  • The futures are moving up
  • Uptrend since 9:30 AM on October 21 low of 2123.25
  • Staying above an ascending triangle on 2-hour time-frame and a horizontal channel on 30-minute time-frame
  • Odds are for an up day

Markets Around The World

  • Markets in the East were mixed – Hong Kong, Mumbai and Seoul were down but Shanghai, Sydney and Tokyo advanced
  • European markets are mixed too; DAX, FTSE 100, CAC-40 and STOXX-600 are up but IBEX-35, FTSE-MIB and Swiss SMI are down
  • Dollar index is down; USD/JPY is up; GBP/USD and EUR/USD are down
  • Commodities are up for the day so far

Key Levels:

  • Critical support levels for S&P 500 are 2146.91, 2142.63 and 2130.09
  • Critical resistance levels for S&P 500 are 2154.79, 2161.56 and 2169.60
  • Key levels for eMini futures: break above 2149.50, the 4:30 AM high, for bulls and break below 2140.50, the low of 12:30 PM on October 24, for bears


  • Pre-NYSE session open, futures price action is to the upside; at 6:45 AM, S&P 500 futures were up by +9.75, Dow by +78.00 and NASDAQ by +29.75
  • On Monday, at 4:00 PM, S&P future (Dec contract) closed at 2144.50 and the index closed at 2151.33 – a spread of about 6.75 points; futures closed at 2144.25 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
  • At the broken resistance or 2015 high; made a green harami within a large red candle of the week of October 10
  • Uptrend remains under pressure; need to rise above 2179.99 to relive the pressure
  • At the previously broken down trend line
  • On Monday, price broke above Friday’s short term one-candle reversal high of 2148.44 , which is good in the short term
  • A downtrend line on 14-day RSI is broken to the upside, usually this is a pre-cursor to the break in the downtrend line in the price
  • For the down turn,  a break below 2114.74 will change the trend
2-Hour (e-mini future)
  • Regained the move up the uptrend line that was broken on October 20; uptrend since 10:00 AM October 13
  • Downtrend since 10:00 AM on September 22 – mostly lower lows and lower highs; need to break above 2156.50 to break this downtrend line
  • Broke to the upside, and staying above it, of an ascending triangle, which initially emerged as an inverse head-and-shoulder pattern
30-Minute (e-mini future)
  • Staying above the horizontal channel that it broke above at 3:30 AM on October 24 after a fake break below it at 9:00 AM on October 21
  • Uptrend since 9:30 AM October 21

Previous Session

S&P 500 24-Oct-16On Monday, major U.S. indices advanced but their price differed from each other. All gapped-up at the open and the retraced. NASDAQ closed at the high for the day and did not come close to touching the opening gap.

DOW Jones Industrial Average and S&P 500 retraced to begin closing the gap before turning around and closing near the middle of the day’s range. Russell 2000 advanced more than others at the open. It too did not come close to gap like NASDAQ but closed off the high. Dow Jones Transportation Average made an inverted hammer pattern with large upper shadow.

NYSE Composite Index closed below its open but near the middle of the day’s range. $VIX, S&P 500 Volatility Index, declined for the fifth day in a row. It has declined six out of last seven trading days.



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