Morning Notes – Tuesday September 4, 2018

/ September 4, 2018

Directional Bias For The Day:

  • S&P Futures are lower; near a support level
  • Odds are for a sideways to down day; watch for break above 2898.25 and below 2892.00 for clarity
  • Key economic data due:
    • ISM Manufacturing PMI (est. 57.6) at 10:00 AM

Markets Around The World

  • Markets in the East closed mixed – Shanghai, Hong Kong, Seoul and Singapore were up; Tokyo, Sydney and Mumbai were down
  • European markets are mostly down – Italy is up
  • Currencies:
    Up Down
    • Dollar index
    • USD/JPY
    • USD/CHF
    • USD/CAD
    • USD/INR
    • EUR/USD
    • GBP/USD
    • AUD/USD
    • NZD/USD
  • Commodities:
    Up Down
    • Crude Oil
    • Sugar
    • NatGas
    • Gold
    • Silver
    • Copper
    • Platinum
    • Palladium
    • Coffee
    • Cotton
    • Cocoa
  • Bonds
    • 10-yrs yield is at 2.886%, up from August 31 close of 2.853%;
    • 30-years is at 3.057%, up from 3.010%
    • 2-years yield is at 2.641%, up from 2.633%
    • The 10-Year-&-2-Year spread is at 0.245, up from 0.220

Key Levels:

  • Critical support levels for S&P 500 are 2892.02, 2884.69 and 2875.72
  • Critical resistance levels for S&P 500 are 2906.32, 2912.26 and 2916.50
  • Key levels for eMini futures: break above 2898.25, the high of 8:00 AM and break below 2892.00, the low of 7:30 AM

Pre-Open

  • On Friday, at 4:00 PM, S&P future (September contract) closed at 2901.25 and the index closed at 2901.52 – a spread of about -0.25 points; futures closed at 2902.00 for the day; the fair value is -0.75
  • Pre-NYSE session open, futures price action is to the down side – at 8:30 AM, S&P 500 futures were down by -4.50; Dow by -72.00; and NASDAQ by -22.00

Directional Bias Before Open

  • Weekly: Uptrend
  • Daily: Uptrend
  • 120-Min: Side
  • 30-Min: Side-Down
  • 15-Min: Side-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 August 24 was a green candle with almost no lower shadow and that closed near the middle of week’s range;  gapped up at the open on Monday and made all time highs
  • Last week’s pivot point=2900.90, R1=2917.12, R2=2932.71; S1=2885.31, S2=2869.09; R1/R2/R3 pivot levels were breached;
  • A second up week in a row; fourth in last five weeks and seventh in last ten weeks
  • Broke above an ascending triangle but retraced back to its upper limit; 100% extension target is near 3070.00 level
  • 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 2639.44 and the 161.8% extension target near 2835.46 are achieved; the 261.8% extension target is near 3013.72
    • 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; Last swing high, 2872.87, was during the week of January 22, 2-018; the low since the last swing high is 2532.69 during the week if February 5, 2018
  • Above 10-week EMA; above 39-week SMA and above 89-week SMA
  • Uptrend
Daily
  • A red spinning top candle, almost a doji with real body near the close or previous day
  • %K is below %D after making bearish divergence
  • Above 20-day EMA, 50-day EMA, 100-day SMA and 200-day SMA
  • Uptrend
2-Hour (e-mini future)
  • Declining from a high of 2917.50 at 2:00 PM on August 29; near a support/congestion level at 2894.00; near the lower bound of horizontal channel emerging since 4:00 AM on August 28
  • RSI-9 made a bearish divergence at 10:00 AM on August 29; in a downtrend since 8:00 PM on August 27; mostly below 40 since 2:00 PM on August 30
  • Below EMA10 of EMA50, which is below 20-bar EMA
  • Bias: Side
30-Minute (e-mini future)
  • Broke below a double top at 6:30 AM; bounced off from 28901.75, which is near 100% extension target and a support zone
  • RSI-9 moved below 30 from a high of 63.77 at 3:00 AM
  • Below 20-bar EMA, which is below 50-bar EMA
  • Bias: Side-Down
15-Minute (e-mini future)
  • Bollinger Band (20, 2.0) is sloping down since 5:15 AM
  • The band is expanding since 3:15 with price mostly hugging the lower band
  • RSI dropped below 25 at 7:30 AM from a high of 70.47 at 3:00 AM
  • The Stochastic (9, 1, 3): %K is above %D after making a bullish divergence at 7:30 AM below 20
  • Bias: Side-Down

Previous Session

Major U.S. indices closed mixed on Friday August 31. Dow Jones Industrial Average, Dow Transports and NYSE Composite closed down. S&P 500, NASDAQ Composite, Russell 200 and Wilshire 5000 Total Market Index closed up. Volume was mixed too. NASDAQ and Russell 2000 traded in lower volume.

For the week, major U.S. indices closed up in mostly higher volume. Russell 2000 traded in less volume during the week. Three S&P sectors – Consumer Staples, Energy and utility – were down for the week. Europe was down for the week and Asia was mostly up, only Shanghai was down.

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

 

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