Market Diary – Thursday Aug 11, 2016

Directional Bias For The Day:

• S&P 500 future is drifting higher; good chance of an up day
• On 2-hour timeframe, S&P 500 future is back in a rectangle trading range; it broke above one August 5th and then fell back into Wednesday before breaking above again in early Thursday trading
• Critical support levels for S&P 500 are 2172.00, 2168.79 and 2165.56
• Critical resistance levels for S&P 500 are 2183.41, 2187.66 and 2193.34
• Early morning futures price action is slightly to the upside; at 8:00 AM, S&P 500 future was up by +4.75, Dow was up by +51.00 and NASDAQ was up by +13.25

Before NYSE Session Open

Major US indices declined on Wednesday but still stayed above the low of Friday, the large range up day. All are making a similar looking pattern of daily charts. traded in a narrow range on Tuesday following another narrow range day on Monday.

On Wednesday, S&P 500 opened at the high of the day and then traded down for most of the day before recovering some ground in the last hour of trading. It is in a down trend since making an all time high at 11:00 AM on August 9th, in the process it is making a down-sloping flag on 30-minute chart. The 3-day candlestick pattern is looking like an evening star, however, the critical support is 2168.79, the low of Friday

• S&P 500 lost -6.25 or -0.3% to close at 2175.49;
• Dow Jones Industrial Average was down -37.39 to 18495.78;
• NASDAQ Composite lost -20.90 or -0.4% to close at 5204.58;
• Russell 2000 was down -8.47 to 1223.27.

Asian Session

Asian bourses were mixed on Thursday.

• Shanghai Composite was down by -16.10 or -0.53% to 3002.64; for the day it made a shooting star candle; break below Tuesday’s low of 2998.68 will be ominous
• Hang Seng closed up by +88.12 or +0.39% to 22580.55; it made a bullish-engulfing pattern with the highest close for 2016
• Nikkei 225 was closed for the day; on Wednesday it made a harami pattern and closed down however, above the open
• Sydney’s S&P/ASX 200 was down by -35.10 or -0.64% to 5508.00; it is in danger of making a lower high if it goes below 5465.70
• Sensex was up by +84.72 or +0.31% to 27859.60; it is staying above a support level but in a downtrend since Tuesday’s opening high;
• South Korea’s KOSPI gained +4.16 or +0.20% to close at 2048.80; it made a bullish engulfing candle for the day

European Session

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

• DAX is up by +37.92 or +0.36% to 10688.31; it is still in consolidation after the break above a down-sloping flag on weekly timeframe
• FTSE-100 is down by -17.30 or -0.25% to 6848.92; it has been up for five consecutive days since August 3rd and a large bullish engulfing candle on August 4th
• CAC-40 is up by +23.73 or +0.53% to 4475.74; it is trying to overcome the resistance of 4490.55, the high of Brexit vote day; it is also knocking at the down-sloping flag on weekly timeframes
• Spanish IBEX is up by +7.70 or +0.09% to 8666.60; it is finding resistance at the low of Brexit day, which is the high point of the gap-down open of day after
• Italian FTSE MIB is up by +26.21 or +0.16% to 16817.76;
• Swiss SMI-SWX is up by +58.60 or +0.71% to 8267.50;
• STOXX-600 is up by +0.65 or +0.19% to 344.63

Currencies

• U.S. Dollar index is up by +0.142 to 95.750;
• EUR/USD is down by -30.2 pips to 1.11520;
• GBP/USD is down by -44.0 pips to 1.2966;
• USD/JPY is up by +20.2 pips (Yen is weaker) to 101.377;

Commodities

• WTI Crude is down by -0.29 or -0.70% to 41.42; it is in a down-trend since June 8th
• Natural Gas is up by +0.14 or +0.62% to 2.577; it is in a down ABCD pattern with and AB=CD target of 2.538
• Gold is down by -0.9 or -0.07% to 1351.00;
• Silver is down by -0.07 or -0.35% to 20.100
• Copper is up by +0.050 or +0.23% to 2.1760

Yields

• U.S. Treasury yields are mixed for the day so far
• 30-year yield is up by +1.6 basis points to 2.243% and 10-year is down by -3.6 basis points to 1.509%

Pivot Levels:

S&P 500 is above its 10-D EMA, 10-D EMA is 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