Morning Notes – Wednesday March 22, 2017

Directional Bias For The Day:

  • The futures are lower
  • Drifting higher since 2:30 AM
  • Pressure is high for a follow through to the sharp decline on Tuesday
  • Odds are for a sideways to down day; watch for break above 2349.50 and below 2337.75 for change of fortunes

Markets Around The World

  • Markets in the East closed sharply lower
  • European markets are lower – Spain is up
  • Dollar index is higher; USD/JPY, GBP/USD and EUR/USD are lower;
  • Commodities are mixed – crude oil and gold are up; NatGas, silver and copper are down
  • 10-yrs yield is at 2.418%, down from March 21 close of 2.436%; 30-years is at 3.033% down from 3.093%

Key Levels:

  • Critical support levels for S&P 500 are 2338.87, 2322.17 and 2315.63
  • Critical resistance levels for S&P 500 are 2352.89, 2358.18 and 2366.30
  • Key levels for eMini futures: break above 2343.25 high of 4:00 PM on March 21 and break below 2337.75, the low of 7:30 AM


  • Pre-NYSE session open, futures price action is to the downside – at 8:30 AM, S&P 500 futures were down by -1.75, Dow by -39.00 and NASDAQ by -2.50
  • On Tuesday, at 4:00 PM, S&P future (June contract) closed at 2340.00 and the index closed at 2344.02 – a spread of about +4.00 points; futures closed at 2342.25 for the day; the fair value is -2.25

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 for the last week, Friday March 17, was a  green bullish engulfing, over a small red doji candle – small body, and relatively larger upper and lower shadows
  • Did not breach earlier high
  • An up week – seventh out of last ten weeks
  • Broke above a down-sloping flag on November 14, 2016; first target of 2285.92 and second target of 2363.14 are achieved
  • Last swing low, 2083.79, was the low on November 4, 2016
  • Above 39-week SMA and 89-week SMA
  • A large red candle day; biggest decline since October 11;
  • Broke below a descending triangle with target near 2308.00;
  • Broke a sequence of higher highs and higher lows; broke below an uptrend line since November lows
  • Streak of intraday range being less than 1.00% since December 29 is broken
  • Breaking out from an up-sloping channel that is in effect since December 27
  • Above 100-day, 200-day and 50-day SMA/EMA but below 20-day EMA
  • Last swing low 2263.62
2-Hour (e-mini future)
  • Broke many support levels; bouncing off near February 15 low of 2331.25; resistance above is near 2349.50, a prior support level
  • Uptrend is under pressure
  • Below falling 20-bar EMA and 50-bar EMA
30-Minute (e-mini future)
  • Bouncing off support after a sharp decline; forming a sharp rounding pattern with up sloping arc
  • Drifting higher since 2:30 AM lows of 2332.25, near February 15 low of 2331.25
  • Down trend since 3:30 AM on March 16; lower lows and lower highs;
  • Below falling 50-bar EMA but above rising 20-bar EMA

Previous Session

U.S. indices closed down sharply. S&P 500 broke its streak of sub-1% intra-day swing since December 29. It declined by -1.2%, the most since October 11 2016.

All major indices broke below the uptrend line since November lows. S&P 500 broke below a descending triangle with a 100% extension target neat 2308.00. Dow Jones Industrial Average too broke below a descending triangle with an 100% extension target near 20400. NASDAQ Composite completed a double top pattern with an 100% extension target near 5713.00 or 1.4%.

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