Morning Notes – Thursday February 2, 2017

Directional Bias For The Day:

  • The futures are lower
  • Trending down after making a high near the gap-down at 9:30 AM on February 1
  • Lower highs, lower lows on 30-minute timeframe
  • Odds are for a down day; watch for break above 2277.75 for change of fortunes

Markets Around The World

  • Markets in the East were mostly down; Mumbai was up; Shanghai was closed
  • European markets are mixed – Germany, Switzerland and STOXX 600 are down; France, U.K. Spain and Italy are up
  • Dollar index, GBP/USD and USD/JPY are down; EUR/USD is up
  • Commodities are mixed: Crude oil, gold and silver are up; NatGAs and copper are down
  • 10-yrs yield is at 2.448%, down from February 1 close of of 2.474%; 30-years is at 3.057%, up from February 1 close of 3.081%

Key Levels:

  • Critical support levels for S&P 500 are 2272.44, 2267.21 and 2257.02
  • Critical resistance levels for S&P 500 are 2289.14, 2300.99 and 2304.16
  • Key levels for eMini futures: break above 2277.75, high of 2:00 PM on February 1 and break below 2265.25, the low of 5:00 AM


  • Pre-NYSE session open, futures price action is to the downside – at 9:00 AM, S&P 500 futures were down by -4.75, Dow is down by -52.00 and NASDAQ is down by -10.50
  • On Wednesday, at 4:00 PM, S&P future (March contract) closed at 2275.00 and the index closed at 2279.55 – a spread of about 4.50 points; futures closed at 2274.50 for the day; the fair value is +0.50

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 for the last week, January 23, was a large green body following two weeks of near dojis bodies with small range within the large green body of January 2 week
  • Broke above a down-sloping flag on November 14, 2016; first target of 2285.92 is met; next target is near 2363.14
  • Last swing low, 2083.79, was the low on November 4, 2016
  • Above 39-week SMA and 89-week SMA
  • Gap down open of Monday January 30 acting as a resistance
  • A red candle after a gap-up open
  • The emerging broadening pattern since December 12, is getting nullified, a break below 2233.62 will resuscitate it
  • Above 100-day, 200-day, 50-day, and 20-day SMA/EMA
  • Sequence of higher highs and higher lows
  • Last swing low 2263.62
2-Hour (e-mini future)
  • Trending down after making a high of 2299.50 at midnight January 25-26; downtrend – lower lows, lower highs
  • Broken above the downtrend line from January 6 high, that it was hugging for many days
  • Uptrend paused
30-Minute (e-mini future)
  • Below a downtrend line since 1:00 AM on January 26
  • Made a double bottom at 11:30 AM on January 31 with a breach of January 30 low
  • Broke above the intermediate high of 2277.00;  fallen back into the range; forming another channel with higher upper limit
  • Below a falling 50-bar and 20-day EMAs after rising above them

Previous Session

U.S. indices were mixed on Wednesday February 1. Major indices turned back in the early morning session near the lower limit o0f the gap-down open of January 30. Russell 2000, Dow Transportation Average and NYSE Composite were down.

Dow Jones Industrial Average is near the middle of its horizontal channel. Dow Transportation Average is nearing the lows of January 3. Russell 200 is near the lower limit of its horizontal channel.

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