Morning Notes – Tuesday February 13, 2018

Directional Bias For The Day:

  • S&P Futures are lower; mostly moving sideways since 2:30 AM
  • Odds are for a sideways day but with elevated levels of volatility – watch for break above 2648.75 and break below 2636.25 for a change of fortunes
  • No Key economic data due:

Markets Around The World

  • Markets in the East were mostly up – Tokyo was down; Mumbai was closed
  • European markets are mostly down – U.K. is up
  • Currencies:
    Up Down
    • EUR/USD
    • GBP/USD
    • NZD/USD
    • USD/CAD
    • Dollar index
    • USD/JPY
    • USD/CHF
    • AUD/USD
  • Commodities:
    Up Down
    • NatGas
    • Gold
    • Copper
    • Platinum
    • Palladium
    • Cocoa
    • Crude Oil
    • Silver
    • Sugar
    • Coffee
    • Cotton
  • Bonds
    • 10-yrs yield is at 2.835%, down from February 12 close of 2.857%;
    • 30-years is at 3.127%, down from 3.137%
    • 2-years yield is at 2.094%, up from 2.081%
    • The 10-Year-&-2-Year spread is at 0.741 down from 0.776

Key Levels:

  • Critical support levels for S&P 500 are 2622.45,  2597.43 and 2569.23
  • Critical resistance levels for S&P 500 are 2672.61, 2711.34 and 2727.67
  • Key levels for eMini futures: break above 2648.75, the high of 1:30 AM and break below 2636.25, the low of 3:00 AM

Pre-Open

  • On Monday, at 4:00 PM, S&P future (March contract) closed at 2654.00 and the index closed at 2656.00 – a spread of about -2.00 points; futures closed at 2655.25 for the day; the fair value is -1.25
  • Pre-NYSE session open, futures price action is to the downside – at 8:30 AM, S&P 500 futures were down by -12.50; Dow by -144.00; and NASDAQ by -41.50

Directional Bias Before Open

  • Weekly: Uptrend Under Pressure
  • Daily: Uptrend Under Pressure
  • 120-Min: Down-Side
  • 30-Min: Side
  • 15-Min: Side
  • 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 February 9 was a large red bodies candle with -5.2% decline following -3.9% decline with a bearish engulfing candle
  • Last week’s pivot point=2638.54, R1=2744.40, R2=2869.24; S1=2513.70, S2=2407.84; S1/S2/S3 were breached;
  • A down week; second in last five weeks and third 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
  • Below 10-week EMA; at 39-week SMA and above 89-week SMA
  • Uptrend under pressure
Daily
  • A follow through after the reversal day on Friday; last two days’ green real bodies are, still, within the large red body of February 8
  • The 38.2% Fibonacci retracement from the lows of February 2016 is near 2465.50; the 38.2% Fibonacci retracement from June 2016 lows is near 2534.86 and the index low on Friday 2532.69
  • 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
  • Bounced off 200-day SMA on February 9
  • Below 50-day EMA and 100-day SMA but above 200-day SMA
2-Hour (e-mini future)
  • Bounced off the lows of 2530.25 at 12:00 PM on February 9, testing the low of 2529.00 on February 5; at the resistance of EMA10 of EMA50 at 2726.75;
  • RSI-9 rising from the lows of 19.35 at 2:00 PM on February 8; declining after crossing 65
  • Sequence of higher highs and higher lows since August 29, 2017 is broken
  • At/above 20-bar EMA but is below EMA10 of EMA50
  • Bias: Down-Side
30-Minute (e-mini future)
  • Potential double bottom or a horizontal channel emerging – two lows of 2529.00 at 11:30 PM on February 5 and 2530.25 at 1:30 PM on February 9 with an intermediate high of 2726.75 at 11:00 AM on February 7; nearing the middle of the channel
  • RSI is mostly between 65 and 40 3:00 PM on February 9
  • At 20-bar EMA which is at 50-bar EMA
  • Bias: Side
15-Minute (e-mini future)
  • Bollinger Band (20, 2.0) is moving sideways since 9:15 PM on February 11
  • The band mostly narrow since 9:30 PM on February 12
  • RSI is mostly between 50 and 40 since 10:45 PM on February 12
  • The Stochastic (9, 1, 3): %K turning down from 97.82 at 7:30 AM
  • Bias: Side

Previous Session

Major U.S. indices closed higher on Monday February 12 following a reversal day on Friday. The volume, however, was lower. It was lowest since February 2 or last seven days.

  • 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
  11. Telecom

 

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