Morning Notes – Friday January 19, 2018

Directional Bias For The Day:

  • S&P Futures are up with increased volatility; rose from 2791.75 to 2806.00 then declined to 2796.00
  • 30-min 8:30 AM candle made a hammer like reversal candle
  • Odds are an up day but with increase volatility with good chance for a down day – watch for break below 2796.00 for change of fortunes
  • Key economic data due:
    • Prelim UoM Consumer Sentiment (est. 97.0) at 10:00 AM

Markets Around The World

  • Markets in the East closed higher – Sydney was down
  • European markets are higher
  • Currencies:
    Up Down
    • Dollar index
    • EUR/USD
    • USD/CHF
    • AUD/USD
    • USD/CAD
    • GBP/USD
    • USD/JPY
    • NZD/USD
  • Commodities:
    Up Down
    • Gold
    • Silver
    • Platinum
    • Palladium
    • Cocoa
    • Crude Oil
    • NatGas
    • Copper
    • Sugar
    • Coffee
    • Cotton
  • Bonds
    • 10-yrs yield is at 2.616 up from January 18 close of 2.611%;
    • 30-years is at 2.896% up from 2.88%
    • 2-years yield is at 2.048% up  from 2.044%
    • The 10-Year-&-2-Year spread is at 0.568 up from 0.534

Key Levels:

  • Critical support levels for S&P 500 are 2792.56, 2768.64 and 2761.28
  • Critical resistance levels for S&P 500 are 2805.83, 2812.08 and 2818.32
  • Key levels for eMini futures: break above 2804.00, the high of 8:00 AM and break below 2796.00, the low of 8:45 AM


  • On Thursday, at 4:00 PM, S&P future (March contract) closed at 2800.25 and the index closed at 2798.03 – a spread of about +2.25 points; futures closed at 2796.25 for the day; the fair value is +3.75
  • Pre-NYSE session open, futures price action is to the upside – at 9:00 AM, S&P 500 futures were up by +3.75; Dow up by +17.00; and NASDAQ up by +26.25

Directional Bias Before Open

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

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

  • 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%
  • 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
  • A relatively small red harami with small lower shadow and smaller upper shadow; showing indecision
  • 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=2798.81; R1=2805.05, R2=2812.08; S1=2791.78; S2=2785.54; No levels were breached
  • Confirmed Uptrend
2-Hour (e-mini future)
  • Futures are moving higher since 10:00 PM last night after falling to 2791.75 from 2809.50
  • Futures are moving higher since 4:00 PM on December 29 in steps; decline from 8:00 AM on January 16 bounced off a support at the EMA50 twice on January 16 and 17
  • Emerging Cup-with-Handle pattern did not break to the upside
  • RSI-9 diverged – 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 fell below 40 on January 16 and the bounce was turned back just above 65; it is toggling between 40 and 65, showing neither the up bias or the down bias is dominant
  • Sequence of higher highs and higher lows since 10:00 AM on November 2 and since August 29 with few exceptions; under pressure
  • At/above rising 20-bar EMA, which is above rising EMA10 of EMA50
30-Minute (e-mini future)
  • Rose from a low of 2791.75 at 10:30 PM last night near a support zone that was once broken to the downtrend line near 2805.75 at 6:30 AM, which was also near the resistance created by the uptrend line that was broken at the NYSE close yesterday; it looks bearish, at least for the short term; a break below 2791.75 will continue the downtrend
  • RSI-14 continued to decline from 74.14 at 2:30 PM on January 17 to just below 40 at 10:30 PM last night; it rose to just above 65 but then again fell below 50; neither the up bias or down bias is dominant
  • Below 20-bar EMA but at EMA10 of EMA50
  • 8:30 AM made spinning top that is more like a hammer with short upper shadow and longer lower shadow; break above 2801.75 would signal a short term reversal
15-Minute (e-mini future)
  • Bollinger Band (20, 2.0) is sloped down from 10:00 PM on January 17 to 3:00 AM; then it expanded and sloped up
  • The band contracted for short time from 2:00 AM to 3:15 AM; price hugged upper band from 2:30 AM to 5:15 AM; then it moved sideways and they declined to hug the lower band
  • MFI-14 falling from the 96.22 to below 50
  • The Stochastic (9, 1, 3): %K made a bearish divergence and 5:45 AM and the price declined from 2806.00 to 2799.25 at 8:15 AM; %K rising from 3.57 and crossed above %D at 8:30;
  • 8:30 AM made shooting star candle and 8:45 AM made a bullish engulfing

Previous Session

Most major U.S. indices declined on Thursday January 18. Dow Jones Transportation Average was positive for the day. Most also made harami candle. NASDAQ Composite made a harami doji. The day’s price action indicated indecision. Market started the day with a decline then a rise in the middle of the day before falling during the final hour of trading.

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


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