Morning Notes – Friday May 5, 2017

Directional Bias For The Day:

  • Futures are flat
  • Moving up since 12:00 AM
  • Trading within a narrow horizontal channel for the past few days
  • Odds are for a range bound day; watch for break below above 2390.75 and below 2379.00 for change of fortunes
  • Dependent upon Non-Farm Payroll data – a good report may be bullish and bad one bearish
  • Key economic data:
    • Non-Farm Payroll – (est. 194K)
    • Avg. Hourly Earnings
    • Unemployment Rate

Markets Around The World

  • Markets in the East were down – Tokyo and Seoul were closed
  • European markets are mixed – Germany, U.K. Spain, Switzerland and STOXX 600 are down; France and Italy are up
  • Dollar index and GBP/USD are up; USD/JPY and EUR/USD are down
  • Commodities are mostly higher – crude oil is lower
  • 10-yrs yield closed at 2.356% on May 4 up from May 3 close of 2.309%; 30-years closed at 2.999% down from 2.955%

Key Levels:

  • Critical support levels for S&P 500 are 2379.75, 2376.17 and 2369.19
  • Critical resistance levels for S&P 500 are 2394.49, 2398.16 and 2400.98
  • Key levels for eMini futures: break above 2390.75, the high of 7:00 AM on May 4, and break below 2379.00, the low of 12:00 AM


  • Pre-NYSE session open, futures price action is flat – at 7:00 AM, S&P 500 futures were up by +1.25; Dow down by -9.00; and NASDAQ up by +2.75
  • On Thursday, at 4:00 PM, S&P future (June contract) closed at 2386.00 and the index closed at 2389.52 – a spread of about 3.50 points; futures closed at 2385.50 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, Friday April 28, was a  green candle, with no lower shadow and a up gap from previous week;
  • An up week – third in last five weeks; sixth in last ten weeks
  • Broke above a down sloping flag (2378.36), which has bullish implications;
  • 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
  • Confirmed uptrend, though pulling back
  • Another near doji candle with a longer lower shadow following a similar one on Wednesday; break above 2391.43 will be bullish, break below 2380.35 bearish
  • Thursday’s high and low breached the high and lows of Wednesday but both move did not sustain
  • Broke above a down sloping flag on April 24; broke above 2378.36, which is bullish; found resistance at flag-pole high of 2400.98; the target will be near 2650.00
  • Move above an up-sloping channel since December 27 still relevant
  • Above 100-day, 200-day, 50-day SMA/EMA and 20-day EMA
  • Last swing low 2263.62
  • Uptrend under pressure
2-Hour (e-mini future)
  • In the middle of a narrow horizontal channel, which is emerging since the break out above another channel at 8:00 AM on April 25 – high 2390.75 and low 2376.00 – up target near 2404.75 and down target near 2361.25
  • Break above a descending triangle on May 1 morphed into a horizontal channel
  • Pause in uptrend since 8:00 PM on April 16; higher highs and higher lows; mostly moving sideways since April 25
  • At or slightly above flat 50-bar EMA and rising 20-bar EMA
30-Minute (e-mini future)
  • Moving up since 12:00 AM on May 5
  • In the middle of a horizontal channel – high of 2390.75 touched at 2:00 PM on May 1 and 7:00 AM on May 4; low of 2375.50 was at 10:30 on May 3 and the low of 2376.00 was at 12:00 PM on May 4
  • Above recently rising 50-bar EMA and rising 20-bar EMA

Previous Session

Major U.S. indices were mixed on Thursday May 4. S&P 500, NASDAQ Composite, Dow Transportation Average and NYSE Composite closed up. Dow Jones Industrial Average , Russell 2000 and Wilshire 5000 Total Market Index closed down.

Day’s price action was within a narrow range. Like on Wednesday, S&P 500 made a doji candle with a longer lower shadow. NASDAQ, NYSE and Wilshire made similar pattern. DJIA made a hammer pattern.

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