Market Remarks

Market Diary – Tuesday Aug 23, 2016

Sunil Sharma

Directional Bias For The Day:

  • The futures are higher after breaking above a resistance
  • Odds are high for an up day
  • On Monday at 4:00 PM, S&P future closed at 2180.50 and the index closed at 2182.64 – a spread of about 2.00 points
  • Critical support levels for S&P 500 are 2179.25, 2175.13, and 2168.50
  • Critical resistance levels for S&P 500 are 2185.15, 2189.56 and 2194.28
  • Pre-NYSE session open, futures price action is to the upside; at 8:45 AM, S&P 500 future was up by +5.00, Dow was up by +47 and NASDAQ was up by +12.25

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

Monthly:
  • Up trend since Feb 08, 2016
Weekly:
  • Up trend since Feb 08, 2016 with one pullback; broke out of a 2-year trading range in July, 2016
Daily:
  • Uptrend since June 28th with one pullback;
2-Hour:
  • Uptrend – higher highs and higher lows since 10:00 AM on Aug 17
  • Broken above a symmetrical triangle – the upper limit connects the highs reached at 12:00 Noon on Aug 15 and at 4:00 AM on Aug 22, the lower limit connects the lows touched at  10:00 AM on Aug 17 and at 8:00 on Aug 22; the target near 2204; apex is at 2179.50 and the breakout point is 2184.50; the height of pattern is 25.25 points
30-Minute:
  • Broke above an ascending triangle (almost a rectangle trading range) – target near 2196.50; the breakout point is 2184.50 and the height of the patterns is 12 points

Before NYSE Session Open

Once again, the major US indices traded in a range on Friday. At the NYSE open, futures were almost in slight negative territory.

Similar to Friday, at open, S&P 500 started the day with a decline and reached a low of 2175.96 in the first half-hour of trading, which was day’s low too. After that it started to rise. It declined slightly mid-day before closing the day near the open. The index ended up making a doji candlestick pattern.

On Monday:

Up Down Last Notes
S&P 500 -1.23 or -0.1% 2182.64
  • A doji candle following a dragonfly doji on Friday
  • A coil / symmetrical triangle on 30-minute chart
Dow Jones Industrial Average   -23.15 or -0.1% 22998.93
NASDAQ Composite +6.22 or +0.1%   5244.60
Russell 2000 +2.97 or +0.2%   1239.74

Asian Session

Asian bourses were mixed on Tuesday:

Up Down Last Notes
Shanghai Composite +4.90 or +0.16%   3089.71
  • A down-sloping flag is forming on 30-minute and daily charts
Hang Seng +1.02 or +0.00%   18529.42
Nikkei 225   -100.83 or -0.61% 16497.26
  •  Turned a 30 points gain mid-day to loss
S&P/ASX 200 +38.7 or +0.70% 5553.80
  • Large bullish engulfing candle
  • 7-Day high range
Sensex +4.67 or +0.02% 27990.21
  • In the middle of a rectangle trading range
Kospi Composite +7.77 or +0.38% 2049.93
  • A green harami within a red candle

European Session

In pre-US session, the European stock markets are mostly higher at 8:00 AM and are near the highs reached at 4:00 AM EST.

Up Down Last Notes
DAX +86.10 or +0.82%   10580.45
  • On a uptrend since 7:00 AM on Aug 22 2016 on 30-minute charts
FTSE-100 +42.01 or +0.62%   6870.65
  •  It has been down four out of past five trading days
CAC-40 +34.86 or +0.79%   4425.33
IBEX +104.7 or +1.24% 8573.10
  • Gap up open; at day’s high
  • Mostly range bound for the past month
FTSE MIB +319.98 or +1.95% 16689.12
  • Price and pattern similar to that of Spanish IBEX
Swiss Market Index +45.55 or +0.56% 8203.40
  • Higher high and higher low on daily charts since Jun 24 2016
STOXX 600 +2.84 or +0.83% 343.27
  • Higher high and higher low on daily charts since Jun 24 2016

Currencies

Up Down Last Notes
US Dollar Index -0.219 94.280
  • Broken below the lower bound of a symmetrical triangle on daily charts
EUR/USD +22.1 pips 1.13418
  • Broke above a down-sloping flag on daily charts of Aug 16 and is staying above it
GBP/USD +51.0 pips   1.31890
USD/JPY -30.5 pips 100.017

Commodities

Up Down Last Notes
WTI Crude  -0.48 or -1.01% 46.93
  • a break below 45.84 will be bearish in the near term
Natural Gas +0.041 or +1.53% 2.720
  • Crossing over the falling 20-D EMA
Gold +4.5 or +0.36%   1348.20
  • Struggling to stay above 20-D EMA
  • Forming a symmetrical triangle on daily charts near 2-year high
Silver +0.156 or +0.83%   19.015
  • Broken below a symmetrical triangle on daily charts near 2-year high on Friday; target near 17.67; support near 17.105
Copper -0.0105 or -0.49% 2.1295
  • In a down-sloping narrow band on weekly charts since Feb 2016 near the 9-year lows

Yields

  • U.S. Treasury yields are mixed for the day so far
  • 30-year yield is down by -0.4 basis points to 2.232% and 10-year is up by -0.10 basis points to 1.549%

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.

S&P 500 Cash eMini Futures
 Daily Level Break
Chance		 Level Break
Chance
Pivot 2181.38 2179.42
R1 2186.10 59% 2185.08 55%
R2 2189.56 43% 2190.17 32%
R3 2194.28 47% 2195.83 27%
S1 2177.92 36% 2174.33 36%
S2 2173.20 34% 2168.67 27%
S3 2169.74 24% 2163.58 19%

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

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