Market Remarks

Market Diary – Monday Aug 22, 2016

Directional Bias For The Day:

  • The futures are lower after testing the resistance created by NYSE session’s last hour high on Thursday, Aug 18 2016 at 5:00 AM
  • The S&P 500 future are at the lower bound of an ascending triangle on 30-minute charts
  • Odds are high for a sideways or a down day – break above 2185.00 by S&P future will increase the odds for an up day whereas a break below 2172.50 will increase the odds for a down day
  • On Thursday at 4:00 PM, S&P future closed at 2181.25 and the index closed at 2183.66 – a spread of about 2.00 points
  • Critical support levels for S&P 500 are 2178.52, 2171.46, and 2167.80
  • Critical resistance levels for S&P 500 are 2186.80, 2191.20 and 2197.41
  • Pre-NYSE session open, futures price action is to the mixed; at 8:45 AM, S&P 500 future was down by -4.00, Dow was down by -49 and NASDAQ was down by -7.25

The trend and patterns on various time frames for S&P 500 are:

Monthly
  • Up trend since Feb 08, 2016
Weekly:
  • Up trend since Feb 08, 2016 with one pullback; broke out of a 2-year trading range in July, 2016
Daily
  • Uptrend since June 28th with one pullback;
  • On Friday, made a dragonfly doji candlestick in a sideways move of 10+ days
2-Hour (e-mini future)
  • Bouncing off a uptrend line connecting the low of 10:00 AM on Aug 17 and the low of 8:00 on Aug 19
  • Turned back from the resistance of 2185.00 – Aug 16th high at 4:00 PM – once again at 4:00 AM
  • Danger of breaking below this pattern
30-Minute (e-mini future)
  • In an ascending triangle that is emerging since 9:30 AM on Aug 19 2016
  • Bouncing off the lower limit of this pattern
  • Danger of breaking below this pattern – if broken the target will be near 2164 level

Before NYSE Session Open

Once again, the major US indices traded in a narrow range on Friday. At the NYSE open, futures were almost unchanged. At open, S&P 500 started the day with a sharp decline and reached a low of 2175.13 in the first half-hour of trading, which was day’s low too. After that it started to rise. It again declined slightly mid-day before closing the day near the highs. The index ended up having a dragonfly doji candlestick pattern but this does not have much significance because it was formed within a sideways move of 10-12 days. Other major indices had similar price-action and a similar candlestick pattern.

On Friday:

  • S&P 500 lost -3.15 or -0.1% to close at 2183.87
  • Dow Jones Industrial Average lost -45.13 or -0.2% to close at 18552.57
  • NASDAQ Composite lost -1.77 or -0.03% to close at 5238.38
  • Russell 2000 was unchanged at -0.08 or -0.01% to close at 1236.77.

Asian Session

Asian bourses were mixed on Monday.

  • Shanghai Composite was down by -23.27 or -0.75% to close at 3084.80; on 30-minute chart, it is  forming a down-sloping flag
  • Hang Seng closed up by +60.69 or +0.26% to 22997.91; halfway through the day’s session it was down by as much as 100 points
  • Nikkei 225 closed up by +52.82 or +0.32% to 16598.19; it closed near the open
  • Sydney’s S&P/ASX 200 was down by -11.6 or -0.21% to 5515.10;
  • Sensex was down by -91.46 or -0.33% to close at 27985.54;
  • South Korea’s KOSPI was down -14.08 or -0.68% to close at 2042.16;

European Session

In pre-US session, the European stock markets are mixed at 8:00 AM and are near the lows for the day and are showing a similar price-action pattern

  • DAX is down by -77.96 or -0.74% at 10466.40; on Monday, DAX opened at the high and then drifted down; the current levels are near the lows
  • FTSE-100 is down by -33.92 or -0.49% to 6825.03
  • CAC-40 is down by -15.71 or -0.36% to 4384.81;
  • Spanish IBEX is down by -19.80 or -0.23%  to 8430.80;
  • Italian FTSE MIB is down by -3.61 or -0.02% to 16306.45;
  • Swiss SMI-SWX is up by +8.06 or +0.10% to 8135.34;
  • STOXX-600 is down by -0.48 or -0.14% to 339.66

Currencies

  • U.S. Dollar index is down by -0.16 to 94.640;
  • EUR/USD is down by -20.5 pips to 1.130450
  • GBP/USD is up by +33.0 pips to 1.31030
  • USD/JPY is up by +33.4 pips (Yen is weaker) to 100.210

Commodities

Up Down Last Notes
WTI Crude  -1.260 or -2.60% 47.60
  • a break below 45.84 will form an evening star pattern after a rally since Aug 3 2016
Natural Gas +0.062 or +2.40% 2.646
  • Attempting to rise above a falling 20-D EMA
Gold -5.9 or -0.4% 1340.30
  • Struggling to stay above 20-D EMA
  • Forming a symmetrical triangle on daily charts near 2-year high
Silver  -0.392 or -2.03% 18.925
  • Broken below a symmetrical triangle on daily charts near 2-year high on Friday; target near 17.67; support near 17.105
Copper -0.0265 or -1.22% 2.1405
  • In a down-sloping narrow band on weekly charts since Feb 2016 near the 9-year lows

Yields

  • U.S. Treasury yields are down for the day so far
  • 30-year yield is down by -1.3 basis points to 2.272% and 10-year is down by -1.0 basis points to 1.568%

Pivot Levels:

S&P 500 is above its 10-D EMA, 10-D EMA is above 20-D EMA and its 20-D EMA is trending above 50-D EMA since March 9, 2016.

S&P 500 Cash eMini Futures
 Daily Level Break
Chance
Level Break
Chance
Pivot 2181.22 2179.50
R1 2187.54 59% 2186.50 56%
R2 2191.20 43% 2191.25 32%
R3 2197.41 47% 2198.25 27%
S1 2177.67 36% 2174.75 36%
S2 2171.46 35% 2167.75 27%
S3 2167.80 24% 2163.00 19%

Note: The probability of a level breaking shown above is for the current condition when the price is above 20-D EMA, 10-D EMA is above 20-D EMA and 20-D EMA is above 50-D EMA. R2 break chance comes in picture only when R1 is broken. So are the probabilities calculated for R3, S2 and S3

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