Market Diary – Monday Aug 22, 2016

Directional Bias For The Day:

• The futures are lower after testing the resistance created by NYSE session’s last hour high on Thursday, Aug 18 2016 at 5:00 AM
• The S&P 500 future are at the lower bound of an ascending triangle on 30-minute charts
• Odds are high for a sideways or a down day – break above 2185.00 by S&P future will increase the odds for an up day whereas a break below 2172.50 will increase the odds for a down day
• On Thursday at 4:00 PM, S&P future closed at 2181.25 and the index closed at 2183.66 – a spread of about 2.00 points
• Critical support levels for S&P 500 are 2178.52, 2171.46, and 2167.80
• Critical resistance levels for S&P 500 are 2186.80, 2191.20 and 2197.41
• Pre-NYSE session open, futures price action is to the mixed; at 8:45 AM, S&P 500 future was down by -4.00, Dow was down by -49 and NASDAQ was down by -7.25

The trend and patterns on various time frames for S&P 500 are:

Before NYSE Session Open

Once again, the major US indices traded in a narrow range on Friday. At the NYSE open, futures were almost unchanged. At open, S&P 500 started the day with a sharp decline and reached a low of 2175.13 in the first half-hour of trading, which was day’s low too. After that it started to rise. It again declined slightly mid-day before closing the day near the highs. The index ended up having a dragonfly doji candlestick pattern but this does not have much significance because it was formed within a sideways move of 10-12 days. Other major indices had similar price-action and a similar candlestick pattern.

On Friday:

• S&P 500 lost -3.15 or -0.1% to close at 2183.87
• Dow Jones Industrial Average lost -45.13 or -0.2% to close at 18552.57
• NASDAQ Composite lost -1.77 or -0.03% to close at 5238.38
• Russell 2000 was unchanged at -0.08 or -0.01% to close at 1236.77.

Asian Session

Asian bourses were mixed on Monday.

• Shanghai Composite was down by -23.27 or -0.75% to close at 3084.80; on 30-minute chart, it is  forming a down-sloping flag
• Hang Seng closed up by +60.69 or +0.26% to 22997.91; halfway through the day’s session it was down by as much as 100 points
• Nikkei 225 closed up by +52.82 or +0.32% to 16598.19; it closed near the open
• Sydney’s S&P/ASX 200 was down by -11.6 or -0.21% to 5515.10;
• Sensex was down by -91.46 or -0.33% to close at 27985.54;
• South Korea’s KOSPI was down -14.08 or -0.68% to close at 2042.16;

European Session

In pre-US session, the European stock markets are mixed at 8:00 AM and are near the lows for the day and are showing a similar price-action pattern

• DAX is down by -77.96 or -0.74% at 10466.40; on Monday, DAX opened at the high and then drifted down; the current levels are near the lows
• FTSE-100 is down by -33.92 or -0.49% to 6825.03
• CAC-40 is down by -15.71 or -0.36% to 4384.81;
• Spanish IBEX is down by -19.80 or -0.23%  to 8430.80;
• Italian FTSE MIB is down by -3.61 or -0.02% to 16306.45;
• Swiss SMI-SWX is up by +8.06 or +0.10% to 8135.34;
• STOXX-600 is down by -0.48 or -0.14% to 339.66

Currencies

• U.S. Dollar index is down by -0.16 to 94.640;
• EUR/USD is down by -20.5 pips to 1.130450
• GBP/USD is up by +33.0 pips to 1.31030
• USD/JPY is up by +33.4 pips (Yen is weaker) to 100.210

Commodities

Yields

• U.S. Treasury yields are down for the day so far
• 30-year yield is down by -1.3 basis points to 2.272% and 10-year is down by -1.0 basis points to 1.568%

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 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 chance comes in picture only when R1 is broken. So are the probabilities calculated for R3, S2 and S3