Market Diary – Tuesday, June 7, 2016

9:40 AM: Break To The Upside?

Futures were drifting since 5:00 AM NY time and made a down trend line – on price and 14-period RSI – on 6-minute chart. Ten minutes after open, RSI downtrend line was broken. Usually, this type of break is followed by the break of trend-line in price too.

8:30 AM: Waiting For Open

Futures are drifting lower after making a high of 2116.25 in the wake of European open and are at the uptrend line.

On Monday, S&P 500 made a high of 2113.36, which is 3.12 points below the 2016 high of 2116.48, the next resistance level. At 8:36 AM, the futures are 2.75 points above their Monday 4:00 PM close, implying S&P 500 is poised to open at resistance.

Directional Bias For The Day:

• The bias is to the upside – mostly driven by inertia;
• Critical resistance levels for S&P 500 are 2116.48 and 2134.72
• Early morning futures price action is indecisive, though, futures are up by 5.50 points, which was mostly gained in the first hour of trading in Europe

Before NYSE Session Open

The global bourses were buoyed by Chair Yellen’s speech on Monday. From Bloomberg: “MSCI All Country World Index headed for its strongest close since April after Federal Reserve Chair Janet Yellen signaled that officials won’t derail the economy with a premature rate hike.”

Asian Session

The Asian bourses were mostly up.

• Shanghai Composite was almost unchanged at +0.07%; it is consolidating at 50-day SMA; Hang Seng gained +1.42% and gapped up for the day
• Nikkei 225 gained +0.58 after the turn-around on Monday making that day a morning star candlestick reversal pattern
• Sydney’s S&P/ASX 200 gained +0.20%, though, it declined in the later half of day’s trading
• Sensex was up by +0.81%, resuming the break out in an uptrend since late-February

European Session

In pre-US session, European stock markets are mostly up.

• DAX is up by +1.72%; it is set to challenge and pass May 31st soon; STOXX 600 is up by +1.21%
•  FTSE-100 is up by +0.41% after a large range upside day on Monday following the bullish engulfing pattern on Friday
• CAC-40 gapped up and closed up by +1.20%;  Italian FTSE MIB is up by +1.73%; Spanish IBEX-35 is up by +0.86% and Swiss SMI-SWX Is up by +0.41%; they all are gapped up

Currencies

• U.S. Dollar index is marginally down; it is forming a bearish horizontal flag and break below 93.74 will open the path to  the support of 92.52
• Euro is up against the dollar; it is showing a similar pattern that of dollar but in reverse
• USD/JPY is slightly up (Yen is weaker); the trend is still down
• Pound is stronger; against euro
• Aussie and Kiwi dollars are up for the day; following a Harami candle on Monday, which was after a large range up day on Friday

Commodities

• WTI Crude is up by +0.43 to 50.12; Natural Gas is slightly up down
• Gold and Silver are down marginally; making two narrow-range days after the large-range up day on Friday
• Copper is down by -0.475 to 2.070 and is set to give all the gains of Friday’s largest range day since May 5, 2016;

Yields

• Treasury yields, U.S. 30-years and 10-years, are little changed; Monday was a Harami day after a large loss on Friday

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.

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