Morning Notes – Tuesday January 10, 2017

Directional Bias For The Day:

  • The futures are trading sideways in a narrow range since 4:00 PM Jan 9 – high 2066.50 and low 2259.50
  • Odds are for a sideways to down day; watch for break of critical level: Friday’s low of 2258.25

Markets Around The World

  • Markets in the East were mixed – Shanghai, Sydney and Seoul were down; Hong Kong and Mumbai were up; Tokyo as closed
  • European markets are mixed – Germany, U.K. and France are up so is STOXX 600; Italy, Spain and Switzerland are down
  • Dollar index, GBP/USD and USD/JPY are up; EUR/USD is down
  • Commodities are mixed; WTI crude, NatGas and copper are up; gold and silver are down
  • 10-yrs yield is at 2.390%, up from Jan 9 close of 2.376; 30-years is at 2.981% up from 2.968% on Jan 9

Key Levels:

  • Critical support levels for S&P 500 are 2265.76, 2260.45, and 2257.32
  • Critical resistance levels for S&P 500 are 2272.49, 2275.49 and 2282.10
  • Key levels for eMini futures: break above 2266.50, high at 5:00 AM and break below 2259.50, the low of 1:00 AM


  • Pre-NYSE session open, futures price action is to the down side – at 9:00 AM, S&P 500 futures were down by -0.75, Dow by -20.00 and NASDAQ by -1.00
  • On Monday, at 4:00 PM, S&P future (March contract) closed at 2264.75 and the index closed at 2268.90 – a spread of about 4.25 points; futures closed at 2265.00 for the day; the fair value is -0.25

The trend and patterns on various time frames for S&P 500 are:

  • Confirmed Uptrend
  • Uptrend resumption since Feb 08, 2016 after a pull back of -15.2%
  • Candlestick was a large green candle that opened in the middle of previous large bearish engulfing and closed above its highs; this was preceded by two weeks of small body candles
  • Broke above a down-sloping flag on November 14, 2016; first target is 2285.92; next 2363.14
  • Last swing low, 2083.79, was the low on November 4, 2016
  • Above 39-week SMA and 89-week SMA
  • Emerging broadening pattern since December 12
  • Above 100-day, 200-day, 50-day and 20-day SMA
  • Sequence of higher highs and higher lows
  • Last swing low 2263.62
2-Hour (e-mini future)
  • Broke above a down-sloping flag at 10:00 AM on Jan 6 the fall back into it at 8:00 Am on Jan 9;
  • Flag pattern is morphing in to a broadening pattern
  • Broke the uptrend line from low at 2:00 PM on Dec 30
30-Minute (e-mini future)
  • Below a downtrend line from the high at 2:00 PM on Jan 6
  • Resistance at 2267.25, the high of 3:30 PM on Jan 4
  • At flattening 50-bar EMA but above a recently rising 20-day EMA

Previous Session

U.S. indices were mostly down on Monday Jan 9, 2017. NASDAQ Composite was the lone major index to rise. It made an all time high ad closed at the highest level too. It has resumed its uptrend after the short decline near the end of December.

Dow Jones Industrial Average is within a narrow horizontal trading range that it has traded within since December 12. Its Transport counter part has remained in the downtrend that started on December 9. S&P 500 is forming a broadening pattern since December 12. A similar pattern is emerging for Wilshire 5000 Total Market Index. Russell 2000’s break from a descending triangle Jan 4 is morphing into a horizontal trading range. NYSE Composite is forming a pattern similar to S&P 500.

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