Morning Notes – Thursday September 6, 2018

Directional Bias For The Day:

  • S&P Futures are unchanged to up; moving within a symmetrical triangle on 30-min chart
  • Odds are for a sideways to up day; watch for break above 2892.75 and below 2885.50 for clarity
  • Key economic data due:
    • ADP Non-Farm Employment Change (163K vs. 195K) at 8:15 AM
    • Unemployment Claims (203K vs. 214K est.) at 8:30 AM
    • ISM Non-Manufacturing PMI (est. 56.8) at 10:00 AM

Markets Around The World

  • Markets in the East closed mostly lower – Mumbai was up
  • European markets are mixed – U.K., Spain and STOXX 600 are down; Germany, France, Italy and Switzerland are up
  • Currencies:
    Up Down
    • EUR/USD
    • GBP/USD
    • AUD/USD
    • USD/CAD
    • NZD/USD
    • USD/INR
    • Dollar index
    • USD/JPY
    • USD/CHF
  • Commodities:
    Up Down
    • Crude Oil
    • Gold
    • Silver
    • Copper
    • Platinum
    • Palladium
    • Cocoa
    • NatGas
    • Sugar
    • Coffee
    • Cotton
  • Bonds
    • 10-yrs yield is at 2.897%, down from September 5 close of 2.902%;
    • 30-years is at 3.075%, up from 3.074%
    • 2-years yield is at 2.641%, down from 2.657%
    • The 10-Year-&-2-Year spread is at 0.256, up from 0.245

Key Levels:

  • Critical support levels for S&P 500 are 2884.36, 2876.92 and 2870.25
  • Critical resistance levels for S&P 500 are 2892.62, 2898.22 and 2903.32
  •  Key levels for eMini futures: break above 2892.75, the high of 5:00 AM and break below 2885.50, the low of 7:00 AM

Pre-Open

  • On Wednesday, at 4:00 PM, S&P future (September contract) closed at 2889.25 and the index closed at 2888.60 – a spread of about +0.75 points; futures closed at 2888.25 for the day; the fair value is +1.00
  • Pre-NYSE session open, futures price action is to the up side – at 9:00 AM, S&P 500 futures were up by +3.25; Dow by +46.00; and NASDAQ by +9.75

Directional Bias Before Open

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

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 small red real body candle with very small upper shadow and longer lower shadow; the low on Wednesday is just above the lower bound of a gap that was opened on August 27
  • %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; broke below a support/congestion level near at 2894.00; the 100% extension target near 2879.00 is achieved
  • RSI-9 made a bearish divergence at 10:00 AM on August 29; in a downtrend since 8:00 PM on August 27; crossed above 40 at 2:00 AM on September after mostly below 40 since 4:00 AM on September 4
  • Below 20-bar EMA, which is below EMA10 of EMA50
  • Bias: Side-Down
30-Minute (e-mini future)
  • Forming a symmetrical triangle since 1:30 AM on September 5; breaking above a downtrend line from a high of 2912.00 made at 3:00 on September 4
  • RSI-9 made a bullish divergence at 3:00 AM; rising above 40 from a low of 26.95
  • At/below 20-bar EMA, which is below 50-bar EMA
  • Bias: Side
15-Minute (e-mini future)
  • Bollinger Band (20, 2.0) is essentially moving sideways since 6:15 PM on September 5
  • The band narrowed from 6:15 PM to 1:30 AM; expanding since then; price moved along the lower band till 3:15; price reached the upper band and is now at the mid-level
  • RSI mostly between 40 and 65 since 11:30 AM on September 5; near 50
  • The Stochastic (9, 1, 3): %K crossed below %D at 8:15 AM; near 70;
  • Bias: Side

Previous Session

Major U.S. indices closed mostly lower on Wednesday September 5 in mostly higher volume. Dow Jones Industrial Average and Do Jones Transportation Average closed up and Russell 2000 traded in less volume. Indices made day’s low in the first hour of trading and then mostly traded up with some mild retracement near the session end.

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

 

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