Market Diary – Thursday July 21, 2016

Directional Bias For The Day:

• Greater likelihood of modest change, odds are for a slight down day
• On 30-minute chart, S&P 500 future is showing consolidation while the daily timeframe is in uptrend
• Critical support levels for S&P 500 are 2166.73, 2159.00 and 2155.79
• Critical resistance levels for S&P 500 are 2177.47, 2181.92 and 2188.21
• Early morning futures price action is to the down side – at 8:30 AM, S&P 500 future was down by -2.50, Dow is down by -27.00 and NASDAQ is up by +3.25.

Before NYSE Session Open

Wednesday saw major U.S. market indices advancing to newer highs. Dow Jones Industrial Averages chalked up it ninth consecutive up day. According to Stock Traders Almanac, since 1950, Dow have had 47 streaks of eight or more winning days. The longest was 13 straight in January 1987. Twenty four ended at eight days (51.06%), 12 streaks lasted for nine days (25.53%), 7 lasted 10 days (14.89%), 2 streaks lasted 11 days (4.26%) and 1 each lasted 12 and 13 days (2.13%). The average loss on the day the streak ended was 0.5%.

On Wednesday, Dow gained +36.02 or +0.2%, S&P 500 +9.24 or +0.43%, NASDAQ +53.56 or +1.06% and Russell 2000 gained +9.30 or +0.77%.

Asian Session

The Asian bourses were mixed on Thursday.

• Shanghai Composite was up by +11.11 or +0.37%, it is knocking on a shallow flag
• Hang Seng was up +118.01 or +0.54%, resuming the uptrend that was started on Jun 24th
• Nikkei 225 gained +128.33 or +0.77% to 16810.22
• Sydney’s S&P/ASX 200 gained +23.70 or +0.43%
• Sensex lost -205.37 or -0.74% to 27710.52; it is still consolidating after two small gap-up opens on July 11 and July 12
• South Korea’s KOSPI lost -3.24 or -0.16%

European Session

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

• DAX is down by -37.59 or -0.37% to 10104.42 still trying to overcome the resistance created by the low of June 23, 10104.92, preceding the June 24 gap-down
• FTSE-100 is down -30.63 or -0.-406% to 6698.36
• CAC-40 is down by -0.67%, Spanish IBEX by -0.76%, STOXX-600 by -0.60%, Swiss SMI-SWX by -0.29%, and Italian FTSE MIB by -0.54%;

Currencies

• U.S. Dollar index is down by -0.373 or -0.30% to 96.89; it is falling back into the rectangle trading box that it broke out of few days ago
• EUR/USD is up by +33.2 pips to 1.10434
• GBP/USD is down by -5642.00 pips to 1.3180
• USD/JPY is down by -1109.1 pips (Yen is stronger) to 106.141 after breaking above the resistance level of 106.840 and reaching the high of 107.494.

Commodities

• WTI Crude is down by -0.16 or -0.35% to 45.59; on Wednesday it bounced off above a support before reaching the low of 43.69
• Natural Gas is up by +0.014 or +0.53% to 2.672 and still remains in danger of forming a head-&-shoulder pattern
• Gold is down to -1.00 or -0.08% to 1318.30; Silver is down by -0.203 or -1.04% to 19.140
• Copper is up by +0.10 or +0.33% to 2.2615

Yields

• U.S. Treasury yields are up following an up Wednesday
• 30-year yield is up 4.5 basis points to 2.342% and 10-year is up by +3.5 basis points to 1.615%

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