Morning Notes – Friday February 2, 2018

/ February 2, 2018

Directional Bias For The Day:

  • S&P Futures are lower
  • Broke below a horizontal channel on 30-minute chart and achieved 61.8% extension; 100% extension target is near 2788.75
  • Odds are for down day with increased volatility – watch for break above 2813.00 for a change of fortunes
  • Key economic data due:
    • Non-Farm Employment Change (200K vs. 181K est.) at 8:30 AM
    • Average Hourly Earnings (0.3% vs. 0.2% est.) at 8:30 AM
    • Unemployment Rate ( 4.1% vs. 4.1% est.) at 8:30 AM
    • Revised UoM Consumer Sentiment (est. 95.0) at 10:00 AM

Markets Around The World

  • Markets in the East closed mostly down – Shanghai and Sydney were up
  • European markets are down
  • 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
    • Copper
    • Palladium
    • Sugar
    • Cotton
    • Cocoa
    • Gold
    • Silver
    • Platinum
    • Coffee
    • Cotton
  • Bonds
    • 10-yrs yield is at 2.788% up from February 1close of 2.730%;
    • 30-years closed at 3.031% up from 3.005%
    • 2-years yield is at 2.162% up from 2.165%
    • The 10-Year-&-2-Year spread is at 0.636 up from 0.608

Key Levels:

  • Critical support levels for S&P 500 are 2812.70, 2807.54 and 2795.40
  • Critical resistance levels for S&P 500 are 2835.96, 2839.26 and 2851.48
  • Key levels for eMini futures: break above 2811.75, the low of 8:30 PM on February 1 and break below 2797.00, the low of 5:00 AM

Pre-Open

  • On Thursday, at 4:00 PM, S&P future (March contract) closed at 2822.00and the index closed at 2821.98 – a spread of about +0.00 points; futures closed at 2822.50 for the day; the fair value is -0.50
  • Pre-NYSE session open, futures price action is to the downside – at 8:30 AM, S&P 500 futures were down by -20.50; Dow by -244.00; and NASDAQ by -35.50

Directional Bias Before Open

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

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 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
Daily
  • Confirmed Uptrend
  • Gap created on January 30 is still active; a near shooting star candlestick; the 38.2% Fibonacci retracement from previous low, of down-sloping flag on December 29, is near 2798.00
  • 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 below the horizontal channel that was broken to  the upside once; at 100% extension of the channel; below a downtrend line form the high
  • RSI-9 made triple top around 54 after falling below 25; RSI is near 25 again; RSI indicating down move will continue
  • Sequence of higher highs and higher lows since 10:00 AM on November 2 and since August 29 with few exceptions; again under pressure
  • Below 20-bar EMA, which is below EMA10 of EMA50
  • Bias: Up-Side
30-Minute (e-mini future)
  • Broke below a horizontal channel that was formed on February 1; high=2837.27, low=2813.00; 61.8% extension target near 2798.00 is achieved; 100% extension target is near 2788.75
  • RSI-14 is below downtrend line but is challenging it now
  • Below 20-bar EMA which is  below 50-bar EMA
  • Bias: Down
15-Minute (e-mini future)
  • Bollinger Band (20, 2.0) is mostly down since January 29; an up-sloping flag on BB is forming
  • The band contracted for a short duration after midnight but is again expanding;
  • RSI is consistently below 65 for a long time
  • The Stochastic (9, 1, 3): %K rose above 80 after reaching 0; is turning down
  • Bias: Down

Previous Session

Major U.S. indices closed mixed on Thursday February 1 but the price action was not bullish. Volume was mostly down. Indices were up at the open following a decline before NYSE open but then they gave most of their gains by the end of session.

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

 

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