Morning Notes – Wednesday September 6, 2017

Directional Bias For The Day:

  • S&P Futures are higher
  • Moving up after sharp decline on September 5, since 1:00 PM
  • Another up-sloping flag, but steeper; a break below 2456.50 will be bearish
  • Odds are for an up to sideways day – watch for break below 2456.50 for a change of fortunes
  • Key economic data due:
    • Trade Balance (-43.7B vs. -44.6B est.) at 8:30 AM
    • Final Services PMI (est. 56.8) at 9:45 AM
    • ISM Non-Manufacturing PMI (est. 55.8) at 10:00 AM
    • Beige Book at 2:00 PM

Markets Around The World

  • Markets in the East closed mostly lower – Shanghai was up
  • European markets are mostly down – Germany and Italy are up; Most are climbing up after a gap down open
  • Currencies:
    Up Down
    • Dollar index
    • EUR/USD
    • GBP/USD
    • USD/JPY
    • USD/CHF
    • USD/CAD
    • AUDUSD
    • NZD/USD
  • Commodities are mostly up
    Up Down
    • Crude Oil
    • NatGas
    • Silver
    • Copper
    • Platinum
    • Palladium
    • Gold
    • Sugar
    • Coffee
    • Cotton
    • Cocoa
  • 10-yrs yield closed at 2.070% on September 5 down from September 1 close of 2.157%; 30-years closed at 2.688% down from 2.768%

Key Levels:

  • Critical support levels for S&P 500 are 2446.55, 2439.03 and 2428.20
  • Critical resistance levels for S&P 500 are 2462.65, 2465.12 and 2471.97
  • Key levels for eMini futures: break above 2465.25, the low of 6:30 AM on September 5 and break below 2456.50, the low of 5:30 AM


  • On Tuesday, at 4:00 PM, S&P future (September contract) closed at 2457.00 and the index closed at 2457.85 – a spread of about 1.00 points; futures closed at 2459.75 for the day; the fair value is -2.75
  • Pre-NYSE session open, futures price action is to the upside – at 8:30 AM, S&P 500 futures were up by +3.50; Dow by +39.00; and NASDAQ by +14.00

Directional Bias Before Open

  • Weekly: Up
  • Daily: Up-to-Side
  • 120-Min: Side-to-up
  • 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%
  • A large green body candle closing near the high for the week ending on Friday September 1; almost ten points below all time high of 2490.87 reached during the week ending on August 11
  • Last week’s pivot point 2461.71; R1=2495.22, R2=2513.89; S1=2443.04, S2=2409.53
  • An up week – second in a row and third in last five weeks; sixth in last ten weeks
  • R1 and R2 of previous week broken after two weeks; S1 and S2 have not been broken for he last two 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
  • Closed above 10-week EMA, 39-week SMA and 89-week SMA
  • Confirmed uptrend, though pulling back
  • A large red candle with no upper shadow and a lower shadow almost equal to the real body
  • At the down trend line from the high on August 8, which was broken to the upside on August 30
  • Last pattern, a down-sloping flag in June that was broken to the upside on July 13, is nullified when price broke below 2430.00; the index was below 2430.00 for only one day
  • At/above 20-day EMA, which is above 50-day EMA; Above 100-day SMA and 200-day SMA
  • Pivot Point=2458.79; R1=2471.03, R2=2484.21; S1=2445.61, S2=2433.37
  • S1/S2/S3 breached after not being tested for three days
  • Uptrend under pressure; mostly moving sideways since June 2 between 2490.00 and 2410.00
2-Hour (e-mini future)
  • Futures are climbing since September 5 12:00 PM low of 2445.50, which followed steep decline in previous two candles; near a resistance level
  • Lower highs and lower lows since 12:00 PM on September 1; sequence will break with a rise above 2471.25
  • At/below drooping 20-bar EMA, which is at/above flattening 50-bar EMA
30-Minute (e-mini future)
  • Mostly moving sideways since 4:30 PM on September 5;
  • Broken below an up-sloping flag; achieved first target, 100% extension, and the second, 138.2% extension
  • At/below drooping 50-bar EMA, which is below flat 20-bar EMA

Previous Session

Major U.S. indices closed lower on Tuesday September 5, a day after the Labor Day weekend.  Indices gapped down at the open that did not fill during the day. Most are forming a 3-day evening star pattern.

Three S&P 500 sectors – Consumer Staples, Energy and Utility – were up on Tuesday.


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