Morning Notes – Wednesday October 26, 2016

Directional Bias For The Day:

S&P 500 eMini Future 25-Oct-16 6:30 AM

  • The futures are down
  • Down trend since 5:00 AM on October 25 high of 2149.75
  • At the lower limit of an ascending triangle on 2-hour time-frame and a horizontal channel on 30-minute time-frame
  • Odds are for a down day

Markets Around The World

  • Markets in the East were mostly down – Tokyo was an exception
  • European markets are down
  • Dollar index, USD/JPY, EUR/USD are down; GBP/USD is up
  • Commodities are down

Key Levels:

  • Critical support levels for S&P 500 are 2135.94, 2130.09 and 2124.57
  • Critical resistance levels for S&P 500 are 2146.66, 2152.41 and 2154.79
  • Key levels for eMini futures: break above 2135.25, the 2:30 AM high, for bulls and break below 2126.25, the low of 5:00 AM, for bears


  • Pre-NYSE session open, futures price action is to the downside; at 6:45 AM, S&P 500 futures were down by -8.00, Dow by -75.00 and NASDAQ by -24.50
  • On Tuesday, at 4:00 PM, S&P future (Dec contract) closed at 2137.75 and the index closed at 2143.16 – a spread of about 5.50 points; futures closed at 2138.00 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
  • 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
  • Below the previously broken down trend line
  • Tuesday lost almost all gains of Monday; price broke above Monday’s low , which is not good
  • The 14-day RSI has come back to the downtrend line that it broke to the upside on Friday
  • For the down turn,  a break below 2114.74 will change the trend
2-Hour (e-mini future)
  • Fell back into the ascending triangle that it broke to the upside on October 20; fallen below the uptrend line, which started on 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
30-Minute (e-mini future)
  • Fallen back into the horizontal channel that it broke above at 3:30 AM on October 24 after a break above it that lasted one day
  • At the lower limit of the horizontal channel
  • Down trend since 5:00 AM October 25

Previous Session

S&P 500 25-Oct-16Major U.S indices undid their Monday’s positive performance on Tuesday. Most closed the opening gap created on Monday and closed below it. NASDAQ Composite bucked this trend, it did not close the gap but still closed below Monday’s low.

Dow Jones Industrial Average is in the middle of a descending triangle after breaking below the uptrend line from February 11 low on October 11. S&P 500 is hugging its corresponding uptrend line. Presently, it is below the line.

$VIX, S&P 500 Volatility Index, broke its streak of down days and formed a bullish engulfing candlestick pattern on Tuesday.


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