Morning Notes – Friday January 13, 2017

Directional Bias For The Day:

  • The futures are drifting sideways since 2:300 PM on Jan 12
  • Odds are for a sideways to a down day; watch for break above 2270.00, break above a downtrend line on 30-minute timeframe

Markets Around The World

  • Markets in the East were mixed – Hong Kong and Tokyo were up and rest were down
  • European markets are higher
  • Dollar index, USD/JPY and GBP/USD are down; EUR/USD is up
  • Commodities are lower
  • 10-yrs yield closed at 2.361% on Jan 12 down from Jan 11 close of 2.370%; 30-years closed at 2.960% higher from 2.957% on Jan 11

Key Levels:

  • Critical support levels for S&P 500 are 2259.20, 2254.25, and 2245.13
  • Critical resistance levels for S&P 500 are 2274.99, 2279.27 and 2282.10
  • Key levels for eMini futures: break above 2271.75, high at 4:30 PM on Jan 11 and break below 2262255, the low of 3:00 PM on January 12


  • Pre-NYSE session open, futures price action is to the up side – at 8:30 AM, S&P 500 futures were up by +0.75, Dow by +15.00 and NASDAQ by +6.50
  • On Thursday, at 4:00 PM, S&P future (March contract) closed at 2265.00 and the index closed at 2270.44 – a spread of about 5.50 points; futures closed at 2263.50 for the day; the fair value is +1.50

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)
  • Downward pressure; lower high, lower lows since 12:00 PM on Jan 6
  • Broke above a down-sloping flag at 10:00 AM on Jan 6; fell back into it at 8:00 Am on Jan 9;
  • Flag pattern is morphing in to a broadening pattern
  • Another down-sloping flag emerging within the broadening pattern
  • Broke the uptrend line from low at 2:00 PM on Dec 30
30-Minute (e-mini future)
  • Two emerging descending triangles; inner triangle was nullified; outer was broken to the downside but price moved back up; will probably nullify and morph into a down-sloping channel
  • Below a downtrend line from the high at 2:00 PM on Jan 6
  • Resistance at 2271.75, the high of 4:30 PM on Jan 11
  • Below falling 50-bar EMA and 20-day EMA

Previous Session

U.S. indices closed lower on Thursday Jan 12, 2017, off the lows for the day. Most had a narrow red body with short upper shadow and longer lower shadow.

Russell 2000 declined the most with -0.9%. It was down by -1.9% at day’s low. It also breached the lower limit of its horizontal trading range but closed above it.

Dow Jones Industrial Average and S&P 500 bounced off 20-day EMA. NASDAQ is still above it.

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