Morning Notes – Thursday July 13, 2017

Directional Bias For The Day:

  • Futures are mixed to little changed
  • Drifting lower since 5:00 AM high of 2446.50
  • Odds are for a sideways to an up day; watch for break below 2437.25 for a change of fortunes;
  • Key economic data due:
    • PPI (est. 0.0%) and Core PPI (est. 0.2%) at 8:30 AM
    • Unemployment Claims (est. 245K) at 8:30 AM
    • Fed Chair Yellen’s testimony at 10:00 AM

Markets Around The World

  • Markets in the East closed higher
  • European markets are higher
  • Dollar index and GBP/USD are up; USD/JPY and EUR/USD are down
  • Commodities are mixed – crude oil and NatGas are down; gold, silver and copper are up
  • 10-yrs yield closed at 2.327% on July 12, down from July 11 close of 2.362%; 30-years closed at 2.895% down from 2.923%

Key Levels:

  • Critical support levels for S&P 500 are 2439.48, 2435.75 and 2429.30
  • Critical resistance levels for S&P 500 are 2450.41, 2453.82 and 2457.43
  • Key levels for eMini futures: break above 2446.50, the high of 5:00 AM and break below 2437.25, the low of 11:00 AM on July 12


  • On Wednesday, at 4:00 PM, S&P future (September contract) closed at 2441.25 and the index closed at 2443.25 – a spread of about 2.00 points; futures closed at 2440.00 for the day; the fair value is +1.25
  • Pre-NYSE session open, futures price action is mixed – at 7:30 AM, S&P 500 futures were up by +1.50; Dow down by -4.00; and NASDAQ up by +9.75

Directional Bias Before Open

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

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 July 7 was a red harami
  • Last week’s pivot point 2424.02; R1=2440.33, R2=2455.49; S1=2408.86, S2=2392.55
  • An up week – third in last five weeks; sixth 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 green candle with an up gap near the down trend line from the recent high
  • Forming down sloping flag on daily timeframe since June 5 with high point made on June 19; need a move above 2446.00 will complete the upside break
  • 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
  • Above 20-day EMA; above 50-day EMA; above 100-day and 200-day
  • Uptrend under pressure
2-Hour (e-mini future)
  • Moving higher since 12:00 PM on July 11; broken above a down trend line (also upper limit of a descending triangle) from June 19 high
  • Broken above a non-standard descending triangle – start on May 31; target near 2480.00
  • Sequence of lower highs and lower lows since 2:00 PM on June 19 is broken with a new higher high
  • Above rising 20-bar EMA, which is above a rising 50-bar EMA
30-Minute (e-mini future)
  • Moving sideways since 10:00 AM on July 12
  • Broken above a triple top
  • At or above rising 20-bar EMA, which is above 50-bar EMA

Previous Session

Major U.S. indices closed higher on Wednesday. Markets gapped up at the open following the release of Chair Yellen’s testimony to Congress and then moved higher.  S&P 500 gained +0.7%, Dow Jones Transportation Average +1.2% and NASDAQ Composite gained +1.1%.

All S&P 500 sectors were up. The best performing sectors were Technology (+1.3%), Real Estate (+1.3%) and Materials (+1.2%).

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