Morning Notes – Wednesday May 17, 2017

/ May 17, 2017

Directional Bias For The Day:

  • Futures are sharply lower
  • Moving down since 9:30 AM on May 16
  • Fresh down leg at 6:00 PM on May 16
  • Breaking below an up-sloping flag that was forming since 8:30 PM at 8:00 AM
  • Odds are for a down day; watch for break above 2388.75 for change of fortunes
  • No key economic data to be released

Markets Around The World

  • Markets in the East were mostly lower – Mumbai was the only one to advance
  • European markets are lower
  • Dollar index and USD/JPY are down; GBP/USD and EUR/USD are up
  • Commodities are mostly higher – Copper is down
  • 10-yrs yield closed at 2.329% down from May 15 close of 2.338%; 30-years closed at 2.992% down from 3.006%

Key Levels:

  • Critical support levels for S&P 500 are 2396.05, 2387.19 and 2381.78
  • Critical resistance levels for S&P 500 are 2405.77, 2410.55 and 2415.33
  • Key levels for eMini futures: break above 2388.75, the high of 7:00 AM and break below 2381.50, the low of 3:00 AM

Pre-Open

  • Pre-NYSE session open, futures price action is to the down side – at 8:15 AM, S&P 500 futures were down by -13.00; Dow by -111.00; and NASDAQ by -32.00
  • On Tuesday, at 4:00 PM, S&P future (June contract) closed at 2398.75 and the index closed at 2400.67 – a spread of about 2.00 points; futures closed at 2397.00 for the day; the fair value is +1.75

The trend and patterns on various time frames for S&P 500 are:

Monthly
  • Confirmed Uptrend
  • Uptrend resumption since Feb 08, 2016 after a pull back of -15.2%
Weekly:
  • Candlestick for the last week, Friday May 12, was a red bearish engulfing candle, with small upper and lower shadows; pivot point 2392.17; R1=2302.60, R2=2414.30; S1=2380.47, S2=2370.04
  • A down week – second in last five weeks; fifth 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
Daily
  • A relatively small red that made all time intra-day high and had very small lower and upper shadows
  • Breaking above  a small down-sloping flag that it tried to break above on May 5, after falling back into it
  • 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)
  • Fallen back into the down-sloping flag that was emerging since 6:00 PM on May 7 and that the price broke to the upside on May 16;
  • Uptrend since 10:00 AM on May 11; higher highs and higher lows;
  • Need to rise above 2403.75 to resume the previous uptrend since 8:00 PM on April 16; mostly moving sideways since April 25
  • Below falling 20-bar EMA, which is below 50-bar EMA
30-Minute (e-mini future)
  • Down trend since 9:30 AM on May 16 – lower lows and lower highs;
  • Falling below an up sloping flag that was emerging from 8:30 PM on May 16
  • Below falling 20-bar EMA, which is below 50-bar EMA

Previous Session

Major U.S. indices closed mixed on Tuesday May 16. S&P 500, Dow Jones Industrial Average and Dow Jones Transportation Average, NYSE Composite and Wilshire 5000 Total Market Index declined. NASDAQ Composite and Russell 2000 advanced. Most made a spinning top candle with very small upper and lower shadow.

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