Morning Notes – Wednesday December 20, 2017

Directional Bias For The Day:

  • S&P Futures are higher; mostly moving up since 4:30 PM on December 19
  • Near a resistance level around 2692.25, which is the prior broken support
  • Futures are poised delicately with reasonable potential to break up or down;
  • Odds are for a sideways – watch for break above 2693.25 and break below 2689.00 for change of fortunes
  • Key economic data due:
    • Existing Home Sales (est. 5.53 M) at 10:00 AM

Markets Around The World

  • Markets in the East closed mostly lower – Tokyo and Sydney were up
  • European markets are mostly lower – U.K. is up
  • Currencies:
    Up Down
    • Dollar index
    • EUR/USD
    • GBP/USD
    • USD/JPY
    • USD/CHF
    • AUD/USD
    • NZD/USD
    • USD/CAD
  • Commodities:
    Up Down
    • Crude Oil
    • NatGas
    • Gold
    • Silver
    • Copper
    • Platinum
    • Palladium
    • Sugar
    • Coffee
    • Cotton
    • Cocoa
  • 10-yrs yield closed at 2.463% on December 19 up from December 18 close of 2.392%; 30-years closed at 2.821% up from 2.744%; 2-years yield is at 1.857%; the 10-Year-&-2-Year spread is at 0.606 up from 0.596

Key Levels:

  • Critical support levels for S&P 500 are 2672.20, 2659.14 and 2652.24
  • Critical resistance levels for S&P 500 are 2687.14, 2694.44 and 2699.25
  • Key levels for eMini futures: break above 2693.25, the high of 5:30 AM and break below 2689.00, the low of 3:30 AM


  • On Tuesday, at 4:00 PM, S&P future (March contract) closed at 2684.25 and the index closed at 2681.47 – a spread of about +2.75 points; futures closed at 2684.00 for the day; the fair value is +0.25
  • Pre-NYSE session open, futures price action is to the upside – at 8:30 AM, S&P 500 futures were up by +9.00; Dow by +103.00; and NASDAQ by +27.00

Directional Bias Before Open

  • Weekly: Up
  • Daily: Up
  • 120-Min: Up
  • 30-Min: Up-To-Side
  • 15-Min: Up-to-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%
  • The week ending on December 15 was a large green candle following a near doji for previous week
  • Last week’s pivot point 2668.97; R1=2686.47, R2=2697.13; S1=2658.31, S2=2640.81; R1 was breached
  • An up week;  fourth in last five weeks and eight in last ten weeks
  • Broke above a down sloping flag on April 24 2017;
    • flag-low was 2322.25 during 27-Mar-17 week; shorter flag-pole length is 317.19 and longer flag-pole length is 590.88;
    • 100% extension target of shorter flag-pole near 2639.41 is achieved; and the 161.8% extension target is near 2835.46
    • 61.8% extension target of longer flag-pole is near 2687.41
  • Broke above a down-sloping flag on November 14, 2016;
    • the flag low was 2083.79 during 31-Oct-16 week; the shorter flag-pole length is 202.13 and the longer flag-pole length is 383.71;
    • 261.8% extension target of shorter flag-pole near 2612.97 is achieved
    • the 161.8% extension target of longer flag-pole is near 2704.63
  • Last swing low, 2322.25, was the low on March 27, 2017
  • Above 10-week EM; above 39-week SMA and 89-week SMA
  • Confirmed uptrend
  • A bearish engulfing candle over a green candle that gapped up at the open; very small upper and lower shadows
  • RSI-14 divergence – on October 20 the RSI was 79.65 and the 2578,29, on November 8 the high was 2595.47 and the RSI was 72.50; on November 30, RSI-14 was 76.67 and the index was at 2657.74; on December 12 the index was 2669.72 and RSI was 74.77; on December 18, the index was at 2694.97 and the RSI was at 75.91 and RSI fell on December 19
  • Last pattern, a down-sloping flag in June that was broken to the upside on July 13, 2017; in August the index declined and tested the broken upper limit of the flag
  • Above 20-day EMA but above 50-day EMA; Above 100-day SMA and 200-day SMA
  • Pivot Point=2685.55; R1=2690.36, R2=2699.25; S1=2676.66; S2=2671.85; S1/S2 were breached
  • Confirmed Uptrend
2-Hour (e-mini future)
  • Futures rising since 4:00 PM on December 19 after falling during the day and breaking below a horizontal channel; the 2:00 PM to 6:00PM candles formed a morning star pattern
  • Broke below a horizontal channel at 8:00 AM on Tuesday; the height of the pattern is approximately 6.00 points; the 161.8% extension target near 2983.00 was achieved on Tuesday; the price is back the broken lower bound of the pattern, which may act as a resistance
  • Sequence of higher highs and higher lows since 10:00 AM on November 2 and since August 29 with few exceptions is reasserted on November 21; it is again under pressure
  • At a flattening 20-bar EMA, which is above a rising 50-bar EMA
30-Minute (e-mini future)
  • Rising since 4:30 PM on December 19, which was a dragonfly doji, a short term reversal pattern; at the a resistance zone near 2692.00, which was a prior support level
  • RSI-14 declines to 23 at 12:00 Noon and the made a divergence at 4:30 PM by declining to only 29.39; it crossed above 40 during early Asian session; it has been rising since but still below 65
  • At/above a flattening 20-bar EMA, which is at/above a flattening 50-bar EMA
15-Minute (e-mini future)
  • Bollinger Band (20, 2.0) has been moving sideways since 2:30 PM on December 18
  • The band contracted during the Asian session after the expansion during Tuesday; the Bandwidth has stayed near 0.10 since 6:00 PM
  • MFI-14 reached above 80 during early Asian session and since then it has stayed above 50 while moving sideways between 80 and 50; it is rising since 6:30 AM and is near 80 again
  • The Stochastic (9, 1, 3) turned up at 6:15 AM from below 20.00; %K crossed above %D

Previous Session

Most major U.S. indices closed lower on Tuesday December 19. Dow Jones Transportation Average was up. Most indices also made a bearish engulfing candle over a candle, Monday’s, that had gapped up at the open. A gap down at the open today will create an island or abandoned baby pattern at the top, which is bearish in nature.

Market opened at the top and then traded down for the rest of the day. DJT recovered most of its losses by the end of the day and made a doji candle with very small upper shadow and larger lower shadow. Russell 2000 made a dark cloud cover patter.

  • S&P 500 Sectors
Up Down
  1. Consumer Staples
  2. Energy
  3. Industrials
  1. Consumer Discretionary
  2. Materials
  3. Finance
  4. Technology
  5. Utility
  6. Heath Care
  7. Real Estate


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