Market Diary – Thursday, May 26, 2016

Directional Bias For The Day:

• Odds are higher for the market to stay in a trading range
• A break of 2092.00 (S&P futures) to the upside may take the it to April high
• A break below 2080.25 may put it back within the trading range in which it stayed since April 29th.
• Watch the opening range and first hour of trading for clues

Before NYSE Session Open

7:00 AM: A Rectangle horizontal channel forming on 6-minute S&P futures

• High 2090.75; Low 2085.25;
• Target after breakout to the upside 2096.25
• Target after breakdown to the downside 2079.75
• The resistance at Tuesday high of 2092
• Support at overnight low 2082.50 followed by Tuesday 9:00 AM low of 2080.25
• Price is within another horizontal channel on higher 3o-minute timeframe
• Higher highs and higher lows on 6-minute after double bottom lows of 2082.50 reached at 21:18 and 22:00 on Tuesday (NY time)

Asian Session

The upbeat mood from New York carried over to markets in Asia and Pacific. Most of them were up for the day..

• Shanghai Composite is forming a rectangle trading range at the lower level of its decline since April high. It could turn out to be a bottoming pattern but is too early to say so.
• Heng Seng is similar to Shanghai Composite but in a slightly firmer
• Nikkei 225 is still up-sloping within a flag on daily chart that has potential to turn bearish.
• Australian S&P/ASX gained +0.28% and is continuing to break out of an inverse head-&-shoulder pattern
• South Korean Kospi declined at the upper limit of a down-sloping flag
• India’s Sensex followed through on its Tuesday breakout with +1.88% gain; It I sbreaking out of an uneven inverse head-&-shoulder pattern.

European Session

In pre-US session, most of the European stock markets are up.

• DAX and CAC-40 gapped up at the open and stayed up for the morning
• Spanish and Italian indices are struggling to keep the stay in green

Currencies

• Dollar index is down marginal but is still in an uptrend;
• Euro gained and is making a rounding bottom on 30-minute chart, which is within a down-sloping flag on daily charts, which is within an up-sloping on weekly chart
• British Pound gained a bit; and is in a trading range for the last couple days on 30-minute chart, which is evolving within an up-sloping flag on daily charts
• USD./JPY declined slightly (i.e. Yen gained against dollar); still within a down-sloping flag on daily charts
• Emerging market currencies are mixed

Treasury Yields

Yields on 30-years and 10-years treasuries are marginally down at 8:00 AM pre-NYSE open. Yesterday, yields gained but stil haven’t broken out of the current pattern, which is directionless

Commodities

• WTI Crude has broken above 50 and is still trending up
• NatGas continues its trend down;
• Gold and Silver are marginally up so far; both in strong downtrend
• Copper is gaining and is breaking out of a down-sloping flag to the upside continuing with the follow up to the  bullish engulfing candlestick pattern of two days ago
• which eclipsed a an indecisive doji of Monday

Yesterday:

All major indices in Western Hemisphere followed up with the breakout of the bullish flag.

Pivot Levels:

S&P 500 closed above 10-D EMA. 10-EMA closed above 20-D EMA for the first time since May 10th. The 20-D EMA is trending above 50-D EMA since March 9, 2016.

S&P 500

Chance

Note: The probability of a level breaking is shown above is for the condition when 1) the price closes above 10-D EMA; 2) 10-D EMA is above 20-D EMA; and 3) 20-D EMA is above 50-D EMA. R2 break probability comes in picture only when R1 is broken. So are the probabilities calculated for R3, S2 and S3