1:45 PM: Beige Book Release
Fed’s Beige Book will be released at 2:00 PM. It is creating some uncertainty. The futures broke above the cup-with-handle pattern at 1:00 PM but they are now back in that range just before the release time of Beige Book. Intraday support is at 2090.50 and a break below that may take price to day’s low.
12:50 PM: Cup & Handle
Just before 1:00 PM, the price is carving out a cup-with-handle pattern, which is bullish in nature. If the price goes above 2096.25 then chances would increase that it would challenge the Tuesday high of 2099.25, which was reached at 11:00 PM NY time on Tuesday.
10:30 AM: S&P 500 Futures Precariously Placed
The second half-hour was more decisive and it formed a bullish engulfing but still closed off the top. The result was that though the first-hour was bullish engulfing candle, it still closed off from the top, reducing its bullishness.
On 30-minute chart, the price is finding resistance at a downtrend line. A break above 2093 would be good for the upward bias of the market.
9:15 AM: Tuesday Low Support Broken
Half hour before the open, S&P 500 futures broke below the low of Tuesday. The volume during the half-hour before the open is almost double of what it was on Tuesday. Remains to be seen if price will bounce or the broken support will become the new resistance.
9:00 AM: Futures Drifting Lower
Pre-NYSE session open, Dow futures are down by -71, S&P futures by -7.5 and NASDAQ futures by -12.00. The charts are also showing a strong downward bias at the moment.
6-minute charts shows a continuous decline from 10:30 PM on Tuesday night – from the beginning of Asian session. Futures tried to bound at 7:30 AM from the lows reached at 3:00 PM on Tuesday.
30-minute chart shows that on Tuesday, futures broke through a support level which became a resistance. It is also showing that the price is at a support level. A bounce up would form a double-bottom and a penetration will form an ABCD pattern to the downside.
The 240-minute chart is showing that the futures are getting rejected at a resistance of 2105.25, the high reached on April 20th.The support below is near 2077, the prior resistance level.
Directional Bias For The Day:
- Odds are good for the market to drift down;
- Watch the opening range and first hour of trading for clues
- Critical support level for S&P 500 – 2088.34 and 2084.87
- ISM PMI is due out at 10:00 AM; the forecast is for 50.5, which is not great.
Before NYSE Session Open
Asian Session
The Asian bourses were mostly down. Sensex was the only exception. China’s PMI indexes for May, which came in line with the estimates, showed that the growth remains subdued. That was a drag on Asian markets, which spilled over to Europe adding to its own growth concerns.
- Shanghai Composite declined by -0.11%, but it was very modest compared to the gain +3.5% day before; Hang Seng was similar though it fell by -0.26%
- Nikkei 225 fell a lot, by -1.62%, most o fit in the last hour of trading. On daily chart it made an evening star 3-candlstick formation, within an up-sloping flag
- Australian S&P/ASX declined by -1.03%; Australian economy is linked a lot closely with Chinese; it is forming a double top pattern on daily timeframe, though has not broken below the low between the two tops
- India’s Sensex was positive with +.17% gain; the day’s action looks like a shooting-star candlestick pattern, which indicates that it may be ripe for a retracement
European Session
In pre-US session, European stock markets are mostly down. They are following through on short-term bearish chart patterns that they have making for the past 2-3 days. Thursday’s ECB meeting is creating uncertainty.
- DAX is down -0.75%; it followed through the bearish engulfing of Tuesday and inching down to last Wednesday’s (May 25) gap-up. Most other European indices are showing similar chart patterns.
- STOXX-600 is down -1.13%; CAC-40 down by -0.81%, FTSE-100 by -0.95%, Italian FTSE MIB by -1.12%, Spanish IBEX-35 by -1.17% and Swiss SMI-SWX by -0.40%
Currencies
- US Dollar index is down by -0.462 to 95.415; on 60-minute chart it broke below a symmetrical triangle after facing a resistance at a down trend line on daily timeframe (see yesterday’s market diary). Next support is between 95.075 to 94.925
- USD/JPY is down by -147 pips to 109.252 (means Yen is stronger against USD). It is knocking on the lower bound of an up-sloping bearish flag
- EUR/USD is up and is at the upper limit of a down-sloping flag;
- Aussie and Kiwi dollars are also up against the dollar. Both are trying to form bullish reversal formations.
Commodities
- WTI Crude is down by -0.53 to 48.57. It broke below a symmetrical triangle. The next support level is near 47.64 to 46.73 range
- Natural Gas is breaking out. It followed through after the larger gain on Tuesday in early Wednesday trading. It is breaking above 2.315, the January 29th high. The next resistance is January 8th high of 2.480.
- Gold and Silver are up marginally; they are forming a down-sloping flag
- Copper is down and is trying to test the recent low of 2.038, reached on May 19th.
Yields
- Treasury yields are down and are forming triangles on daily timeframe
Yesterday:
On Tuesday major U.S. indices had an up-&-down day showing indecision.
Pivot Levels:
S&P 500 is above 10-D EMA; 10-EMA is above 20-D EMA; 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 | 2096.37 | 2094.92 | ||
| R1 | 2104.07 | 61% | 2103.83 | 57% |
| R2 | 2111.19 | 42% | 2112.67 | 31% |
| R1 | 2118.89 | 44% | 2121.58 | 22% |
| S1 | 2089.25 | 35% | 2086.08 | 35% |
| S2 | 2081.55 | 35% | 2077.17 | 27% |
| S3 | 2074.43 | 24% | 2068.33 | 23% |
Note: The probability of a level breaking is shown above is for the current condition when 1) the price is 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
