Morning Notes – Thursday January 19, 2017

Directional Bias For The Day:

  • The futures are slightly lower
  • Drifting down after climbing to 2267.25 by 8:00 PM on January 18
  • Odds are for a down to sideways day; watch for break above 2267.25 for change of fortunes

Markets Around The World

  • Markets in the East were mixed: Shanghai and Hong Kong were down; Tokyo, Sydney, Mumbai and Seoul were up;
  • European markets are mixed: France and Spain are down Germany, Italy and Switzerland are up
  • Dollar index, GBP/USD and EUR/USD are up; USD/JPY is down
  • Commodities are mostly down: only crude oil is up
  • 10-yrs yield closed at 2.389% up from Jan 17 close of 2.327%; 30-years closed at 2.985% up from 2.927% on Jan 17

Key Levels:

  • Critical support levels for S&P 500 are 2266.29, 2262.81 and 2254.25
  • Critical resistance levels for S&P 500 are 2276.47, 2278.68 and 2282.10
  • Key levels for eMini futures: break above 2267.27, high at 8:00 PM on January 18 and break below 2261.50, the low of 5:00 AM


  • Pre-NYSE session open, futures price action is to the downside – at 7:30 AM, S&P 500 futures were down by -1.75, Dow by -15.00 and NASDAQ by -2.75
  • On Wednesday, at 4:00 PM, S&P future (March contract) closed at 2266.50 and the index closed at 2271.89 – a spread of about 5.50 points; futures closed at 2266.50 for the day; the fair value is +0.00

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 for the last week was a narrow body with longer lower shadow than upper shadow; week before it was large green candle than open in the middle of previous large bearish engulfing and closed above the highs
  • Break of the high of week 2-Jan, 2282.10, is critical for the continuation of the uptrend
  • 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
  • Last Friday’s narrow body with small upper and lower shadow followed a dragonfly candle on previous day
  • 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; hugging the downtrend line from January 6 high; lower high, lower lows since 12:00 PM on Jan 6, the sequence was broken at 8:00 Am on Jan 13 with a higher high; waiting for a follow up higher low
  • 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)
  • Emerging symmetrical triangle
  • Below a downtrend line from the high at 9:00 AM on Jan 13
  • Bouncing off 61.8% Fib retracement of the rise from Jan 12 low of 2248.50 to Jan 13 high of 2273.50
  • Below falling 50-bar EMA and 20-day EMA, which are acting as resistance since Jan 16

Previous Session

U.S. indices were mostly positive on Wednesday January 18. Dow Jones Industrial Average and NYSE Composite were exceptions.

The day’s action did not change the emerging pattern in any way. The range was narrow with S&P 500, DJIA and NASDAQ Composite having moved only 0.4% from high to low.

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