Market Diary – Wednesday July 6, 2016

Rectangle Trading Box

A rectangle trading range is emerging on 6-minute char of S&P 500 futures.

• The high is bounded by 2084.50-2085.75 reached at 4:54 PM on Tuesday and at 3:24 AM on Wednesday.
• The low is bounded by 2067.50-2066.75 reached at 10:42 PM on Tuesday and 7:00 AM on Wednesday.

Directional Bias For The Day:

• The bias is to the down side
• On 30-minute chart, S&P 500 futures broke below a rectangle trading box on Tuesday. Couple of attempts to get back up failed. This increases the probability of chance of price reaching the measured target between 2055 & 2061. The corresponding range for the index is 2064-2070
• Critical support levels for S&P 500 are 2073.96 and 2063.11
• Critical resistance levels for S&P 500 are 2095.05 and 2101.23;
• Early morning futures price action is to the down side; S&P futures are down more than 10 points and Dow futures are down nearly 100 points

Before NYSE Session Open

Asian Session

The Asian bourses were mostly down on overnight.

• Shanghai Composite was up by +10.90 or +0.36% to 3017.28; It is following through on the break out of bullish rectangle trading range; the next resistance is 3% above at 3097;
• Hang Seng was down -255.43 or -1.23%; it is traversing to the lower bound of  a symmetric triangle
• Nikkei 225 declined by -290.34 or -1.85%, however, it made a hammer pattern after a gap-down open
• Sydney’s S&P/ASX 200 lost -0.58% and again got rejected from a support-turned-resistance of the lower bound of a rectangle box
• Sensex was closed; South Korea’s Kospi fell by -1.85%

European Session

In pre-US session, European stock markets are mostly down and also near the lows reached post-Brexit vote.

• DAX is down by -1.85%; STOXX 600 is down by -1.70%
• FTSE-100 is down by -1.60
• CAC-40 is down by -1.87%; Italian FTSE MIB is down by -1.97%
• Spanish IBEX-35 is down by -1.76% and Swiss SMI-SWX is down by -1.00%;

Currencies

• U.S. Dollar index is marginally down -0.034 to 96.225 after making a bullish engulfing pattern on Tuesday; it is also breaking above an up-sloping flag with a high point of 96.86
• EUR/USD is up by +6.5 pip to 1.10730 and is breaking below a down-sloping flag;
• GBP/USD is down by -70 pips to 1.2949; On Tuesday it lost -262 on Tuesday and made a 30-year low of 1.2798 during the early Asian session on Wednesday
• USD/JPY is down by -100 pips (Yen is stronger) to 100.734; it is up against all trading partners
• Commodity currencies – of Russia, New Zealand, South Africa – fell by at least -0.5%

Commodities

• WTI Crude is down by -0.18 or -0.30 to 46.45 near the lower bound of a descending triangle; Natural Gas is down by  -1.09%;
•  Gold is up by +12.50 or +0.92% to 1371.20; Silver is up by +0.253 or +1.27% to 20.160
• Copper is down by -0.0335 or -1.52% to 2.15

Yields

• Sovereign yields are down around the world; over $10 trillion of government bonds have negative yields
• U.S. 30-years is at the all time low at 2.132%
• U.S. 10-years is also at all time low at 1.365%

Pivot Levels:

S&P 500 is above its 10-D EMA and its 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 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