Market Diary – Monday August 1, 2016

Directional Bias For The Day:

• Greater likelihood of a range bound day, with a down pressure
• On the 4-hour chart, S&P 500 future broke above a narrow rectangle trading box, which it was forming since July 13th
• Critical support levels for S&P 500 are 2171.49, 2165.70 and 2157.10
• Critical resistance levels for S&P 500 are 2177.09, 2184.99 and 2192.90
• European indices gapped up at the open but since are in a downward trend and have filled the gap
• Early morning futures price action is slightly to the up-side, though 9 points off the high; at 8:30 AM, S&P 500 future was up by +0.75, Dow was up by +14.00 and NASDAQ was up by +2.00

Before NYSE Session Open

Major US indices were again range bound on Friday. Last week was mixed for the major U.S. indices. S&P 500 and Dow Jones Industrial Averages declined for the week after four consecutive up weeks. NASDAQ Composite and Russell 2000 continued their up-streak to five weeks.

On Friday, S&P 500 fell at the start and then rose before declining in the afternoon session. It still closed up for the day at +3.54 gain. The Dow Jones Industrial Average declined by -24.11. After closing at an all time high of July 20th, Dow has declined six times out of seven trading days. NASDAQ Composite gained +7.15. It has gained five out of last seven trading days. Russell 2000 gained +2.62.

Asian Session

The Asian bourses were mixed on Monday.

• Shanghai Composite was down by -25.95 or -0.87% to 2953.38; it is at a support, which was resistance, after failing to overcome a resistance of April high; a break below 2931 will open the path to 2800 level
• Hang Seng gained +237.77 or +1.09% to 22129.14; it made the high of 2016 last week and in an uptrend since February 8th
• Nikkei 225 gained +66.50 or +0.40% to 16635.77; it made a short term reversal on Friday and Monday was a follow through
• Sydney’s S&P/ASX 200 gained +25.00 or +0.45% to 5587.40; it is in an uptrend since February 8th; it is also forming an inverse head-&-shoulder pattern on weekly time frame
• Sensex was down by -48.74 or -0.17% to 28003.12; it is also on an uptrend since February 29th; on Monday, it made a spinning top candlestick – an almost doji, indicating indecision
• South Korea’s KOSPI was up by +13.42 or +0.67%; it is trying to overcome a resistance at 2035.27

European Session

In pre-US session, the European stock markets are to the downside, after most of them gapped up at the open.

• DAX is down by -33.74 or -0.33% to 10303.76; it is more than 140 points below the high and is making a bearish engulfing candle
• FTSE-100 is down by -27.66 or -0.41% to 6696.77; it broke Friday’s low of 6691.13, which was also the low for the week
• CAC-40 is down by -0.74% to 4406.87; on weekly chart, it is knocking at the downtrend line resistance
• Spanish IBEX is down by -0.63% to 8532.90;
• Italian FTSE MIB is down by -0.94% to 16690.16;
• Swiss SMI-SWX is up by +0.40% to 8127.20
• STOXX-600 is down -0.56% to 339.97

Currencies

• U.S. Dollar index is up by +0.174 to 95.685; on Friday it broke below a support level and is still below it
• EUR/USD is down by +7.3 pips to 1.11677
• GBP/USD is down by -20.00 pips to 1.3207
• USD/JPY is up by +40.3 pips (Yen is weaker) to 102.450

Commodities

• WTI Crude is down by -0.77 or -1.85% to 40.83; it broke below a support level and the next support is 37.61
• Natural Gas is down by -1.25% to 2.844
• Gold is down by -2.50 or -0.18% to 1355.00; Silver is up by +0.158 or +0.78% to 20.505
• Copper is up by +0.0010 or +0.05% to 2.2225

Yields

• U.S. Treasury yields are up for the day so far
• 30-year yield is up +6.1 basis points to 2.243% and 10-year is up by +5.0 basis points to 1.508%

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