Morning Notes – Tuesday January 16, 2018

Directional Bias For The Day:

  • S&P Futures are higher; moving sideways since 6:30 PM on January 14; most of the gains occurred at the start of week’s trading
  • Odds are for an up day but sideways to down from current levels – watch for break below 2796.00 for change of fortunes
  • Key economic data due:
    • Empire State Manufacturing Index (17.7 vs. 18.5 est.) at 8:30 AM

Markets Around The World

  • Markets in the East closed mostly up – Sydney and Mumbai were down
  • European markets are mostly up – U.K. and Switzerland are down
  • Currencies:
    Up Down
    • USD/JPY
    • USD/CHF
    • Dollar index
    • EUR/USD
    • GBP/USD
    • AUD/USD
    • NZD/USD
    • USD/CAD
  • Commodities:
    Up Down
    • Platinum
    • Cocoa
    • Crude Oil
    • NatGas
    • Gold
    • Silver
    • Copper
    • Palladium
    • Sugar
    • Coffee
    • Cotton
  • Bonds
    • 10-yrs yield is at 2.535% down from January 12 close of 2.552%;
    • 30-years is at 2.837% down from 2.853%
    • 2-years yield is at 1.998% down from 2.002%
    • The 10-Year-&-2-Year spread is at 0.537 down from 0.550

Key Levels:

  • Critical support levels for S&P 500 are 2778.25, 2761.28 and 2752.78
  • Critical resistance levels for S&P 500 are 2792.85, 2799.45 and 2811.06
  • Key levels for eMini futures: break above 2803.50, the high of 6:00 AM and break below 2797.25, the low of 3:00 AM

Pre-Open

  • On Friday, at 4:00 PM, S&P future (March contract) closed at 2786.50 and the index closed at 2786.24 – a spread of about +0.25 points; futures closed at 2788.75 for the day; the fair value is -2.25
  • Pre-NYSE session open, futures price action is to the upside – at 9:00 AM, S&P 500 futures were up by +12.25; Dow up by +200.00; and NASDAQ up by +35.00

Directional Bias Before Open

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

The trend and patterns on various time frames for S&P 500 are:

Monthly
  • Confirmed Uptrend
  • December 2017 closed higher; index has been higher for the nine straight months; it has only one down month, March 2017, since October 2016
  • Uptrend resumption since Feb 08, 2016 after a pull back of -15.2%
Weekly:
  • The week ending on January 12 was a large green candle with almost no upper and lower shadows; the change was +1.6%
  • Last week’s pivot point 2770.05; R1=2804.04, R2=2821.84; S1=2752.25, S2=2718.26; R1/R2 were breached;
  • An up week;  fourth in last five weeks and seventh 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 near 2687.41 is achieved; the 100% extension target is near 2913.13
  • 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 near 2704.63 is achieved; the 261.8% extension target is near 3088.34
  • 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 relatively large green candle with almost no lower and upper shadows and gap with previous one
  • RSI-14 divergence is nullified as RSI made a new high
  • 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; since then the index has made three very small flags; it broke to the upside of the last flag on January 2
  • Above 20-day EMA but above 50-day EMA; Above 100-day SMA and 200-day SMA
  • Pivot Point=2781.24; R1=2792.45, R2=2799.45; S1=2774.64; S2=2763.03; R1/R2/R3 were breached
  • Confirmed Uptrend
2-Hour (e-mini future)
  • Futures are moving higher since 4:00 PM on December 29 in steps; regaining that trend after drifting down from 12:00 PM on January 9 to 4:00 AM January 10; bounced off EMA10 of EMA501t 8:00 AM on January 10
  • RSI-9 is flashing a divergence potential – 6:00 PM on January 14 the price made a high of 2787.50 and RSI was 90.39; at 4:00 AM on January 16, the price made a high of 2803.50 but the RSI was at 85.63; RSI is below 80 now
  • Sequence of higher highs and higher lows since 10:00 AM on November 2 and since August 29 with few exceptions; reasserted on January 3;
  • Above rising 20-bar EMA, which is above rising EMA10 of EMA50
30-Minute (e-mini future)
  • Moving up since 5:30 AM on January 10; broke above a resistance of 2796.00 at 3:00 AM; now coming back to broken level
  • RSI-14 has mostly stayed above 50 since 10:30 AM on January 10; since 9:30 AM on January 12, it  has toggled around 65 with one very brief dip below 50 and two dips  above 75
  • At/above 20-bar EMA, which is above rising EMA10 of EMA50
15-Minute (e-mini future)
  • Bollinger Band (20, 2.0) has been moving sideways since 10:45 PM on January 14
  • The band mostly stayed contracted till European session o January 16; the BW was mostly below 0.20; the band expanded mildly from 4:00 AM to 8:00 AM before contracting a bit
  • MFI-14 has been declining since 3:15 AM
  • The Stochastic (9, 1, 3): %K declined to 0 at 7:00 AM; now rising and above 50

Previous Session

Major U.S. indices advanced on Friday January 12. Market gapped at the open and continued to climb higher. Most indices closed near the highs. Russell 2000 closed near the middle of day’s range.

For the week, market made a large green candle and closed near the highs. Most S&P sectors also advance for the week. Utility and Real Estate closed down for the week.

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

 

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