Morning Notes – Monday July 3, 2017

Directional Bias For The Day:

  • Futures are higher
  • Drifting higher since 6:00 PM on July 2
  • Last fifteen minutes of sharp decline on Friday will impact early morning trading and will give clue for the rest of the day
  • Odds are for a sideways to an up day watch for break below 2423.25 for a change of fortunes
  • Key economic data due:
    • ISM Manufacturing PMI (est. 55) at 10:00 AM

Markets Around The World

  • Markets in the East closed mostly higher – Sydney was down
  • European markets are higher
  • Dollar index and USD/JPY are up; GBP/USD and EUR/USD are down
  • Commodities are mostly down – crude oil is higher
  • 10-yrs yield closed at 2.302% on June 30 up from June 29 close of 2.267%; 30-years closed at 2.840% up from 2.814%

Key Levels:

  • Critical support levels for S&P 500 are 2421.65, 2405.70 and 2385.68
  • Critical resistance levels for S&P 500 are 2432.71, 2442.93 and 2450.42
  • Key levels for eMini futures: break above 2430.25, the high of 4:30 AM and break below 2423.50, the low of 8:30 PM on July 2


  • On Friday, at 4:00 PM, S&P future (September contract) closed at 2420.50 and the index closed at 2423.41 – a spread of about 3.00 points; futures closed at 2421.00 for the day; the fair value is -1.00
  • Pre-NYSE session open, futures price action is to the upside – at 8:15 AM, S&P 500 futures were up by +8.00; Dow by +72.00; and NASDAQ by +16.75

Directional Bias Before Open

  • Weekly: Up
  • Daily: Up
  • 120-Min: Side
  • 30-Min: Side

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 June 30 was a bearish engulfing candle with small upper shadow and a large lower
  • Last week’s pivot point 2426.51; R1=2447.32, R2=2471.23; S1=2402.60, S2=2381.79
  • A down week – second in last five weeks; fourth in last ten weeks
  • Broke above a down sloping flag (2378.36) on April 24, which has bullish implications; first target is near 2520.00 and the second target is near 2640.00
  • Broke above a down-sloping flag on November 14, 2016; first target of 2285.92 is achieved; second target is near 2467.50
  • Last swing low, 2322.25, was the low on March 27, 2017
  • Above 39-week SMA, 89-week SMA and 10-week SMA
  • Confirmed uptrend, though pulling back
  • A small red harami candle within a large bearish engulfing candle; indecision but mostly continuation of previous day
  • Bouncing off the upper limit of a horizontal channel that it broke above in May – high 2400.58 and low 2322.25 – 100% extension target near 2480.00
  • Below 20-day but above 50-day EMA, 100-day and 200-day
  • Confirmed uptrend
2-Hour (e-mini future)
  • Bouncing off from just below May 31 low of 2402.75; near the previous support line at 2428.00, which may act as a resistance
  • Rising since 12:00 PM on June 29; near the middle of descending triangle which was briefly breached on June 29
  • Sequence of lower highs and lower lows since 2:00 PM on June 19
  • At falling 20-bar EMA, which is below falling 50-bar EMA
30-Minute (e-mini future)
  • Drifting up since 2:30 PM on June 29 in a very narrow range; below the breakdown level of June 29
  • Rising from the lows of 2402.25 after making a triple top near 2445.00-2445.50;
  • Above recently rising 20-bar EMA and above rising 50-bar EMA; 20-EMA is below 50-EMA

Previous Session

Major U.S. indices closed mixed on June 30. NASDAQ Composite and Russell 2000 were down and others were up. Indices were up during the day but gave up most of their gains in the last fifteen minutes of trading.

Five S&P 500 sectors were up and five on June 30. Discretionary, Staples, Energy, Materials and Industrials were up. and Finance, Technology, Utility, Healthcare and Real Estate were down.

For the week, the indices were mixed too. Dow Jones Transportation Average, Russell 2000 and NYSE Composite were up for the week. Russell 2000 was almost unchanged. Dow Jones Industrial Average, S&P 500, NASDAQ Composite and Wilshire 5000 Total Market Index were down for the week.




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