Morning Notes – Monday January 29, 2018

Directional Bias For The Day:

  • S&P Futures are lower
  • An up-sloping flag is emerging on 6-minute chart and a break below 2864 will be bearish
  • Made all time high at the week’s open, good probability that it may be tested
  • Odds are an up to sideways day; good chance of increased volatility – watch for break above 2874.75 and below 2844.25 for change of fortunes
  • Key economic data due:
    • Personal Spending (0.4% vs. 0.5% est.) at 8:30 AM
    • Core PCE Price Index (0.2% vs. 0.2% est.) at 8:30 AM

Markets Around The World

  • Markets in the East closed mixed – Shanghai, Hong Kong and Tokyo were down; Mumbai, Sydney and Seoul were up
  • European markets are mixed – Germany, Spain, Switzerland and STOXX 600 are down; U.K., France and Italy are up
  • Currencies:
    Up Down
    • Dollar index
    • USD/JPY
    • USD/CHF
    • USD/CAD
    • EUR/USD
    • GBP/USD
    • AUD/USD
    • NZD/USD
  • Commodities:
    Up Down
    • Crude Oil
    • NatGas
    • Gold
    • Silver
    • Platinum
    • Palladium
    • Cotton
    • Copper
    • Sugar
    • Coffee
    • Cocoa
  • Bonds
    • 10-yrs yield is at 2.707% up from January 26 close of 2.703%;
    • 30-years is at 2.950% up from 2.911%
    • 2-years yield is at 2.136% up  from 2.112%
    • The 10-Year-&-2-Year spread is at 0.571 down from 0.591

Key Levels:

  • Critical support levels for S&P 500 are 2858.98, 2846.18 and 2830.94
  • Critical resistance levels for S&P 500 are 2872.09, 2881.77 and 2890.66
  • Key levels for eMini futures: break above 2874.75, the high of 2:00 AM and break below 2864.00, the low of 5:00 AM


  • On Friday, at 4:00 PM, S&P future (March contract) closed at 2873.00 and the index closed at 2872.87 – a spread of about +0.25 points; futures closed at 2874.50 for the day; the fair value is -1.50
  • Pre-NYSE session open, futures price action is to the downside – at 9:15 AM, S&P 500 futures were down by -9.50; Dow by -59.00; and NASDAQ by -21.50

Directional Bias Before Open

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

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 26 was a large body green candle, with almost no upper and lower shadows
  • Last week’s pivot point 2851.29 R1=28294.45 R2=2916.04; S1=2829.70, S2=2786.54; R1/R2/R3 were breached;
  • An up week;  fourth in last five weeks and ninth 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
  • Confirmed Uptrend
  • Last big pattern, a down-sloping flag in June 2017, 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
2-Hour (e-mini future)
  • Broke above an Ascending triangle at 8:00 AM on January 22; 161.8% extension target near 2872.01 is achieved
  • RSI-9 divergence could still happen; at 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; at 2:00 AM on January 23, the price made 2842.00 and RSI was at 90.04; 1t 8:00 PM on January 28, the price was 2878.25 and RSI was 87.91
  • Sequence of higher highs and higher lows since 10:00 AM on November 2 and since August 29 with few exceptions; under pressure
  • Above flattening 20-bar EMA, which is above rising EMA10 of EMA50
  • Bias: Up-Side
30-Minute (e-mini future)
  • Broke above a symmetrical on January 24; High=2855.25, Low=2825.50; the 61.8% extension target near 2870.64 is achieved; the 100% extension target is near 2882.00
  • Last pattern bullish ABCD or symmetric triangle broke to the upside on January 22; 261.8% extension target near 2867.50 is achieved
  • RSI-14 is declining since 9:00 PM on Sunday; it is hovering around 50; a break below will be ominous
  • At 50-bar EMA which is below 20-bar EMA
  • Bias: Side-Down
15-Minute (e-mini future)
  • Bollinger Band (20, 2.0) is sloping down since 8:45 PM on January 28
  • The band expanded during the Asian session, then contracted briefly, then expanded and then again contracted briefly just before the NYSE open
  • The Stochastic (9, 1, 3): %K is below 20
  • Bias: Down

Previous Session

Major U.S. indices closed higher on Friday January 26. The gains across the board were large. There were almost no upper and lower shadows. Most indices made all time highs. Dow Jones Transportation Average made a green harami candle within a larger red candle. Russell 2000 is making a morning star type pattern. The high on Friday did not reach the high on Wednesday, the first candle of the morning star.

For the week, most indices made large gains. DJT declined and is making an evening star pattern. Russell 2000 had larger upper shadow and smaller body and almost no lower shadow. The candle could become an evening star. Most indices made large green candles with almost no upper and lower shadow. For the week, all S&P 500 sectors were up.

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


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