Morning Notes – Wednesday August 16, 2017

Directional Bias For The Day:

  • S&P Futures are higher
  • Moving higher since 2:00 AM after trading sideway from 10:00 AM on August 15
  • Odds are for a sideways to an up day – watch for break below 2461.00 for a change of fortunes
  • Key economic data due:
    • Building Permits (1.22M vs. 1.25M est.) at 8:30 AM
    • Housing Starts (1.16M vs. 1.22M est.) at 8:30 AM
    • FOMC Meeting Minutes at 2:00 PM

Markets Around The World

  • Markets in the East closed mostly higher – Shanghai and Tokyo were down
  • European markets are higher
  • Dollar index, and USD/JPY are up; EUR/USD and GBP/USD are down
  • Commodities are mixed – crude oil and copper are up; NatGas, gold and silver are down
  • 10-yrs yield is at 2.273% up from August 15 close of 2.266%; 30-years is at 2.852% up from 2.841%

Key Levels:

  • Critical support levels for S&P 500 are 2461.61, 2454.96 and 2448.09
  • Critical resistance levels for S&P 500 are 2474.41, 2483.45 and 2490.87
  • Key levels for eMini futures: break above 2471.25, the high of 5:30 AM and break below 2467.25, the low of 8:00 AM


  • On Tuesday, at 4:00 PM, S&P future (September contract) closed at 2463.50 and the index closed at 2464.61 – a spread of about 1.00 points; futures closed at 2463.75 for the day; the fair value is -0.25
  • Pre-NYSE session open, futures price action is to the upside – at 9:00 AM, S&P 500 futures were up by +6.25; Dow by +58.00; and NASDAQ by +15.50

Directional Bias Before Open

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

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%
  • A large red candle after few weeks doji candles the week ending on August 11
  • Last week’s pivot point 2456.65; R1=2475.54, R2=2509.77; S1=2422.42, S2=2403.53
  • A down week, second in 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
  • At 10-week EMA; above 39-week SMA and 89-week SMA
  • Confirmed uptrend, though pulling back
  • A small red candle with almost no upper shadow and small lower shadow
  • Last pattern was down-sloping flag in June; was broken to the upside on July 13; the first target (100%) extension is near 2507.00; pattern will be relevant is futures do not fall below 2430.00
  • Pattern before that was a horizontal channel, resulting in upside break, with a 100% extension target near 2480.00, which was achieved on August 8
  • At 20-day EMA; at 50-day EMA; above 100-day and 200-day
  • Confirmed Uptrend
2-Hour (e-mini future)
  • Pullback from Monday’s high stopped near 38.2% retracement of the bounce and turned around
  • Continuing the bounce from Thursday-Friday’s low to resistance made by 2474.50, the August 9 high
  • Sequence of lower highs and lower lows since 12:00 PM high on August 8 with one exception
  • Above rising 20-bar EMA, which is above recently rising 50-bar EMA
30-Minute (e-mini future)
  • Broken above a downtrend line from the high at 9:30 PM on August 14
  • Higher highs and higher lows since the low of 2434.00 at 7:30 AM on August 11; lower lows and lower highs on a larger scale, since August 8 high
  • Targets from last week’s bearish pattern were achieved
  • Above a rising 20-bar EMA, which is above rising 50-bar EMA

Previous Session

Major U.S. indices closed mixed on Tuesday, August 15. Dow Jones Industrial Average and Dow Transportation Average closed higher.

S&P 500, DJIA, NASDAQ Composite and DJT had most of the price action above or near Monday’s high. Russell 2000 made a dark cloud cover candle. NYSE Composite and Wilshire 5000 Total Market Index made harami candles.

Four S&P 500 sectors – Consumer Discretionary, Energy, Industrial and Real Estate – were down on Tuesday. Healthcare was unchanged..

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