Market Diary – Tuesday August 2, 2016

Directional Bias For The Day:

• Futures are facing down ward pressure
• On 4-hour chart, S&P 500 future is back within a narrow rectangle trading box; on 30-minute chart its is forming a descending triangle and is hugging its lower limit
• Critical support levels for S&P 500 are 2166.21, 2159.70 and 2153.19
• Critical resistance levels for S&P 500 are 2178.29, 2183.86 and 2189.43
• Early morning futures price action is to the downside; at 8:00 AM, S&P 500 future was down by -5.50, Dow was down by -33.00 and NASDAQ is down by -10.00

Before NYSE Session Open

Major US indices were mixed on Monday and traded in a narrow range except for NASDAQ Composite. S&P 500 declined by -2.76 but stayed within a rectangle trading box. Dow Jones Industrial Averages declined by -27.73 and is testing the resistance turned support. It is forming a down-sloping flag. Russell 2000 lost -0.82 but its trajectory is still upward. NASDAQ Composite gained +22.07 and its is breaking to the upside.

Asian Session

The Asian bourses were again mixed on Tuesday.

• Shanghai Composite was up by +17.89 or +0.61% to 2971.28; it is bouncing off support, which was a prior resistance
• Hang Seng was closed
• Nikkei 225 lost -244.32 or -1.47% to 162391.45; it is struggling to continue the rally that started on July 8th
• Sydney’s S&P/ASX 200 lost -46.90 or -0.84% to 5540.50; it made a bearish engulfing and a break below 5539.29 will form a short term reversal
• Sensex was down by -21.41 or -0.08% to 27981.71; uptrend since February 29th is still intact
• South Korea’s KOSPI was down by -10.58 or -0.52% to 2019.03; it is trying to overcome a resistance at 2035.27

European Session

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

• DAX is down by -130.17 or -1.26% to 10200.35; on Monday, it was almost unchanged but closed down -130 from day’s high
• FTSE-100 is down by -24.61 or -0.37% to 6669.34; it is trading below Monday’s low, which was lower than Friday’s low of 6691.13, which was also the low of last week
• CAC-40 is down by -1.40% to 4347.29; Monday was a bearish engulfing candle, which closed -1.50% below day’s high
• Spanish IBEX is down by -2.28% to 8320.10; it is forming a similar pattern than that of CAC-40
• Italian FTSE MIB is down by -1.90% to 16239.67;
• Swiss SMI-SWX is down by -0.81% to 8061.00
• STOXX-600 is down -0.80% to 337.13

Currencies

• U.S. Dollar index is down by -0.357 to 95.320; on Friday it broke below a support level, which became a resistance and on Monday, it failed to overcome it; it doesn’t have a significant support till 93.730
• EUR/USD is up by +32.5 pips to 1.11959; it doesn’t have any significant resistance till 1.14280
• GBP/USD is up by +93.00 pips to 1.3271; the nest resistance is 1.3481
• USD/JPY is down by -76.9 pips (Yen is stronger) to 101.585; it is on track to test the low of 99.003 made on June 24th after Brexit vote

Commodities

• WTI Crude is up by +0.50 or +1.25% to 40.56; it is still below the support that it two trading days ago; the next support is 37.61
• Natural Gas is up by +0.69% to 2.790
• Gold is up by +10.00 or +0.74% to 1369.60; Silver is up by +0.245 or +1.20% to 20.745
• Copper is up by +0.0195 or +0.89% to 2.22185

Yields

• U.S. Treasury yields are up for the day so far
• 30-year yield is up +7.0 basis points to 2.304% and 10-year is up by +6.0 basis points to 1.556%

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