Morning Notes – Friday December 22, 2017

/ December 22, 2017

Directional Bias For The Day:

  • S&P Futures are almost unchanged; mostly moving sideways since 6:30 PM on Thursday; drifting down since 4:30 AM
  • In the middle of a horizontal channel on 30-Minute chart
  • Odds are for a sideways move with down bias from current levels – watch for break above 2691.50 and break below 2686.50 for change of fortunes
  • Key economic data due:
    • Core Durable Goods Orders (-0.1% vs. 0.5% est.), Durable Goods Orders (1.3% vs. 2.1% est.) at 8:30 AM
    • Core PCE Price Index (0.1% vs. 0.1% est.) at 8:30 AM
    • Personal Spending (0.3% vs. 0.4% est.) at 8:30 AM

Markets Around The World

  • Markets in the East closed mostly higher – Shanghai was down
  • European markets are lower
  • Currencies:
    Up Down
    • Dollar index
    • GBP/USD
    • USD/JPY
    • USD/CHF
    • AUD/USD
    • USD/CAD
    • EUR/USD
    • NZD/USD
  • Commodities:
    Up Down
    • Crude Oil
    • NatGas
    • Gold
    • Silver
    • Copper
    • Sugar (unch.)
    • Platinum
    • Palladium
    • Cocoa
    • Coffee
    • Cotton
  • Bonds
    • 10-yrs yield is at 2.485% up from December 20 close of 2.481%;
    • 30-years is at 2.845% up from 2.832%;
    • 2-years yield is at 1.882% up from 1.853%;
    • The 10-Year-&-2-Year spread is at 0.603 down from 0.644

Key Levels:

  • Critical support levels for S&P 500 are 2682.40, 2676.11 and 2672.20
  • Critical resistance levels for S&P 500 are 2692.64, 2694.44 and 2696.78
  • Key levels for eMini futures: break above 2691.50, the high of 3:00 AM and break below 2686.50, the low of 6:00 PM on December 21

Pre-Open

  • On Thursday, at 4:00 PM, S&P future (March contract) closed at 2688.25 and the index closed at 2683.57 – a spread of about +3.75 points; futures closed at 2687.75 for the day; the fair value is +0.50
  • Pre-NYSE session open, futures price action is mixed – at 8:45 AM, S&P 500 futures were up by +0.25; Dow down by +14.00; and NASDAQ down by -1.50

Directional Bias Before Open

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

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:
  • 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
Daily
  • A near gravestone red doji candle; break below its low will be critical
  • 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=2686.54; R1=2690.67, R2=2696.78; S1=2680.43; S2=2676.30; R1 was breached
  • Confirmed Uptrend
2-Hour (e-mini future)
  • Futures moving sideways with little upward pressure since 10:00 AM on December 20; near the highs
  • Broke below a horizontal channel at 8:00 AM on December 19; the height of the pattern is approximately 6.00 points; the 161.8% extension target near 2983.00 was achieved on Tuesday; the price has turned back from just above the broken lower bound of the pattern, which is acting 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 flattening 20-bar EMA, which is above flattening 50-bar EMA
30-Minute (e-mini future)
  • Moving sideways since the NYSE close on Thursday
  • RSI-14 has not broken above 65 since 2:30 PM on December 18 except for three occasion; it is near 40 level
  • At/below flat 50-bar EMA, which is below flat 20-bar EMA
15-Minute (e-mini future)
  • Bollinger Band (20, 2.0) has been moving sideways since 11:00 PM on December 21; the bias is to the downside since 9:30 AM on December 19
  • The band contracted from 9:45 PM on Thursday to 7:30 AM; it is expanding since then
  • MFI-14 is declining from 4:30 AM high of 79.25 and is at 34.89
  • The Stochastic (9, 1, 3) declined from 3:00 AM in steps and %K dipped to 0 by 7:45 AM; it is rising since then and %K crossed above %D at 8:15 AM

Previous Session

Major U.S. indices closed higher on Thursday December 21. Most indices gave up most of their gains during the last hour of trading. Dow Jones Industrial Average, S&P 500, NASDAQ Composite and Wilshire 5000 Total Market Index made a near gravestone dojis. Russell 2000 held on to most of its gains and along with NYSE Composite closed above the open. Others closed below the open.

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

 

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