Market Diary – Tuesday July 19, 2016

Directional Bias For The Day:

• The futures are directionless, but with slight downward pressure
• The 30-minute chart of S&P 500 future is showing a descending triangle
• Critical support levels for S&P 500 are 2155.79 and 2146.21
• Critical resistance levels for S&P 500 are 2170.28 and 2179.00 ;
• Early morning futures price action is little move to the downside – at 8:30 AM, S&P 500 was down by -4.75, Dow by -1.00 and NASDAQ by -10.25

Before NYSE Session Open

Last week, S&P 500 broke above a trading range that it was stuck in since 2014. On Monday, it gained +0.24% and stayed above the break out level. Dow Jones Industrial Average, too, broke above its trading range last week. On Monday, both closed at all time high. However, NASDAQ Composite and Russell 2000 did break above their respective high of 2015 so far.

Asian Session

The Asian bourses were mixed on Tueday.

• Shanghai Composite was down by -6.96 or -0.23%, since last Wednesday, it has traded in a narrow band near a resistance level
• Hang Seng was down -129.98 or -0.60% after a streak of five up days
• Nikkei 225 stuck to its name and closed up by +225.46 or +1.37% to 16723.31, finally closing the gap-down created on June 13
• Sydney’s S&P/ASX 200 lost -7.2 or -0.13% to 5451.30, but it stayed above the breakout level from a resistance created in May 2016
• Sensex gained +40.96 or +0.15; it seems to be consolidating after two small gap-up opens on July 11 and July 12
• South Korea’s KOSPI lost -4.22 or -0.21%

European Session

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

• DAX is down by -93.69 or -0.93% to 9969.44; it is getting rejected at the low of June 23 preceding the June 24 gap-down
• FTSE-100 is down -3.31 or -0.-06% to 6691.91;
• CAC-40 is down by -0.71%, Spanish IBEX by -0.51%, STOXX-600 by -0.58, Swiss SMI-SWX by -0.65%, and Italian FTSE MIB by -1.20%,

Currencies

• U.S. Dollar index is up by +0.533 to 97.120; the uneven handle that was being formed morphed into a rectangle trading box and the index broke above it in the European session
• EUR/USD is down by -49.8 pips to 1.10246 and breaking below a down-sloping flag on 240-minute chart
• GBP/USD is down by -123 pips to 1.3128 heading toward the test the post-Brexit lows
• USD/JPY is up by +34.0 pips (Yen is weaker) to 106.40; it nearing the resistance level of at 106.840

Commodities

• WTI Crude is down by -0.29% to 45.11; it is staying below the lower limit of a descending triangle that the price broke below on July 7th
• Natural Gas is up by -1.40% to 2.763, but it is in danger of forming a head-&-shoulder pattern
• Gold is unchanged, +0.20 to 1329.50; Silver is down by -0.50% to 19.975
• Copper is up by +0.49% to 2.2495

Yields

• U.S. Treasury yields are down following a down Monday, which closed above the open
• 30-year yield is down to 2.284% and 10-year to 1.570%

Pivot Levels:

S&P 500 is above its 10-D EMA, 10-D EMA crossed above 20-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 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 probability comes in picture only when R1 is broken. So are the probabilities calculated for R3, S2 and S3