Morning Notes – Friday August 18, 2017

/ August 18, 2017

Directional Bias For The Day:

  • S&P Futures are lower
  • Were positive till 9:00 AM
  • Moving in a horizontal channel – high of 2434.00 and low of 2423.75 – since NYSE close on August 17
  • Odds are for a down to sideways day – watch for break above 2434.00 for a change of fortunes
  • Key economic data due:
    • Prelim UoM Consumer Sentiment (est. 4.0) at 10:00 AM

Markets Around The World

  • Markets in the East closed mostly lower – Shanghai was up
  • European markets are lower
  • Dollar index, and USD/JPY are down; EUR/USD and GBP/USD are up
  • Commodities are mostly higher – NatGas and coffee are down
  • 10-yrs yield is at 2.190% down from August 17 close of 2.199%; 30-years is at 2.778% down from 2.782%

Key Levels:

  • Critical support levels for S&P 500 are 2429.30, 2412.9 and 2407.70
  • Critical resistance levels for S&P 500 are 2453.35, 2465.02 and 2474.93
  • Key levels for eMini futures: break above 2434.00, the high of 9:00 PM on August 17 and break below 2424.25, the low of 4:30 AM

Pre-Open

  • On Thursday, at 4:00 PM, S&P future (September contract) closed at 2429.00 and the index closed at 2430.01 – a spread of about 1.00 points; futures closed at 2429.50 for the day; the fair value is -0.50
  • Pre-NYSE session open, futures price action is to the downside – at 9:00 AM, S&P 500 futures were down by -1.00; Dow by -10.00; and NASDAQ up by +14.75

Directional Bias Before Open

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

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:
  • A doji candle near the middle of the range for the last week, Friday July 28; made all time highs during the week
  • Last week’s pivot point 2472.023; R1=2484.12, R2=2496.13; S1=2460.01, S2=2447.91
  • A down week – first after three up weeks and second in last five weeks; third 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
Daily
  • A large red candle with no upper and lower shadows that closed at the lowest level since July 11
  • A bearish ABCD (A=2490.87; B=2437.75; C=2474.93) pattern is emerging; the 100% extension is near 2421.81 and 161.8% extension is near 2388.98
  • Last pattern was down-sloping flag in June; was broken to the upside on July 13; low on Thursday broke below 2430.00; if price does not bounce then this pattern will be nullified
  • 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)
  • Sideways move since 4:00 PM on August 17 near the support at 2430.25, the low of 6:00 AM on August 11; briefly breached the support
  • Pulling back to lower bound of the horizontal channel from the upper bound
  • Sequence of lower highs and lower lows since 12:00 PM high on August 8 with one exception;
  • Below falling 50-bar EMA, which is below falling 20-bar EMA
30-Minute (e-mini future)
  • Breaking above a symmetrical triangle near a support
  • Lower lows and lower highs on a larger scale, since August 8 high
  • At a flattening 20-bar EMA, which is below falling 50-bar EMA

Previous Session

Major U.S. indices closed sharply lower on Thursday 17. The decline was second biggest for 2017. Most broke below last 3-days lows. NASDAQ Composite and Dow Jones Transportation Average were the only major indices that did not breach last week’s lows. The price action of indices indicate more weakness in the near future.

All S&P 500 sectors were down for the day. Five S&P sectors – Consumer Staples, Materials, Technology, Utility and Real Estate – are up for the week.

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