Market Diary – Wednesday July 20, 2016

Directional Bias For The Day:

• The futures are showing an upward bias
• On 30-minute chart, S&P 500 future broke above the downtrend line beginning from 5:30 AM on July 14; in the process it turned an emerging descending triangle to a symmetric triangle
• Critical support levels for S&P 500 are 2159.00, 2155.79 and 2146.21
• Critical resistance levels for S&P 500 are 2176.52, 2179.00 and 2191.50
• Early morning futures price action is to the upside – at 8:30 AM, S&P 500 future was up by +4.75, Dow by +49.00 and NASDAQ by +12.50

Before NYSE Session Open

Tuesday was mixed day for U.S. indices. S&P 5pp shed -3.11 to 2163.78; NADAQ Composite lost -19.41 and Russell 2000 lost -7.46. However, Dow Jones Industrial Averages gained +25.96.

Asian Session

The Asian bourses were mixed on Wednesday.

• Shanghai Composite was down by -8.65 or -0.29%, since last Wednesday, it has traded in a narrow band near a resistance level and maybe forming a flag like pattern
• Hang Seng was up +209.28 or +0.97% and the chances of the resumption of the uptrend since Jun 24th are high
• Nikkei 225 stumbled and lost -41.42 or -0.25% to 16681.89, making a small green harami doji within a larger green candle
• Sydney’s S&P/ASX 200 gained +37.40 or +0.69% to 5488.70, following through the breakout from a resistance created in May 2016
• Sensex gained +128.27 or +0.46% to 27915.89; it is still consolidating after two small gap-up opens on July 11 and July 12
• South Korea’s KOSPI lost -1.43 or -0.07%

European Session

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

• DAX is up by +140.11 or +1.40% to 10121.35; it is trying to overcome the resistance created by the low of June 23, 10104.92, preceding the June 24 gap-down
• FTSE-100 is up +3.29 or +0.-06% to 6700.86;
• CAC-40 is up by +0.87%, Spanish IBEX by +0.53%, STOXX-600 by +0.64%, Swiss SMI-SWX by +0.74%, and Italian FTSE MIB by +0.41%; all except Swiss SMI-SWX are trying to overcome the resistance created by the low of June 23 preceding the June 24 gap-down

Currencies

• U.S. Dollar index is up by +0.172 or +0.18% to 97.280; it is following through the breakout from a rectangle trading box
• EUR/USD is down by -18.0 pips to 1.09955 and increasing the chances of a test of the low 1.09119 created on June 24th; the next support is at 1.08222
• GBP/USD is up by +42.00 pips to 1.3139; still toward the test the post-Brexit lows, though the probability has decreased since Tuesday
• USD/JPY is up by +44.0 pips (Yen is weaker) to 106.604; it nearing the resistance level of at 106.840

Commodities

• WTI Crude is down by -2.08% to 43.72; it has resumed the descend following the break below a descending triangle; the measured target is 40.15
• Natural Gas is down by -1.91% to 2.676 and still remains in danger of forming a head-&-shoulder pattern
• Gold is down to -15.90 or -1.19% to 1316.40; Silver is down by -0.497 or -2.48% to 19.510
• Copper is down by -0.0385 or -1.61% to 2.2265

Yields

• U.S. Treasury yields are up following a down Tuesday
• 30-year yield is up 14 basis points to 2.288% and 10-year to up 10 basis points to 1.568%

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