Market Remarks

Market Diary – Wednesday Aug 24, 2016

Sunil Sharma

Directional Bias For The Day:

  • The futures are slightly higher after regaining the break above a resistance
  • Odds are for a sideways than a trend day with price feeling up pressure
  • On Tuesday at 4:00 PM, S&P future closed at 2185.00 and the index closed at 2186.90 – a spread of about 2.00 points

Key Levels:

  • Critical support levels for S&P 500 are 2183.17, 2175.13, and 2178.04
  • Critical resistance levels for S&P 500 are 2189.56, 2193.42 and 2197.90
  • Pre-NYSE session open, futures price action is slightly to the upside; at 8:00 AM, S&P 500 future was up by +1.25, Dow was up by +8 and NASDAQ was up by +4.25

Economic Data:

  • U.S. Existing Sales at 10:00 AM – estimated=5.52M; previous=5.57M

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;
  • Tuesday was a gravestone doji day near all time high
  • Mostly sideways move since August 5.
2-Hour (e-mini future)
  • Uptrend – higher highs and higher lows; last swing low 2173.50
  • The beak above a symmetrical triangle at 4:00 AM on Aug 23 faced resistance at 2190.75
  • Emergence of an ascending triangle – break-off level is above 2191.50 (highs at 12:00 PM on Aug 15 and at 10:00 AM on Aug 23); the lower limit connects by lows at 10:00 AM on Aug 17 (2165.5) and at 8:00 AM on Aug 22 (2173.50); the height is 26 points
30-Minute (e-mini future)
  • Still making higher highs and higher lows – last swing low 2180.75 after the swing high of 2191.50
  • Broken above a down trending line since Aug 23 2016 10:00 AM high
  • A bullish engulfing reversal at 3:00 AM – European open – with a low of 2180.75 that tested the Aug 23 2:30 AM low of 2181.25

Before NYSE Session Open

Major U.S. indices open the day with a gap and reached the day’s high in the first hour of trading and then trade lower. Dow Jones Industrial Average gave most of its gap whereas S&P 500 and NASDAQ have not filled the gap. All three closed near the lows for the day. Russell 2000 did not follow this pattern and had a better outcome that others.

On Tuesday:

Up Down Last Notes
S&P 500 +4.26 or +0.2%   2186.90
  • A gravestone doji
  • Day’s high 2193.42 – all time high 2193.81
Dow Jones Industrial Average +17.88 or +0.1%   18547.30
  •  A gravestone doji
  • Closed 84 points below day’s high
NASDAQ Composite +15.48 or +0.3%   5260.08
  •  Gap from Monday
Russell 2000 +8.84 or +0.7%   1248.58
  •  Highest since Jul 2015

Asian Session

Asian bourses were mixed on Wednesday:

Up Down Last Notes
Shanghai Composite   -3.83  (-0.12%) 3085.88
  • A down-sloping flag is forming on 30-minute and daily charts
Hang Seng   -178.15  (-0.77%) 22820.78
  •  Bearish engulfing on Wednesday
Nikkei 225 +99.94 (+0.6%)   16597.30
S&P/ASX 200 +7.9 (+0.14%) 5561.70
  • Following a large bullish engulfing candle
Sensex +69.73 (+0.02%) 28059.94
  • In the middle of a rectangle trading range
Kospi Composite   -6.17  (-0.3%) 2043.76
  • Gave up almost all the gains of Tuesday

European Session

In pre-US session, the European stock markets are mostly higher at 8:30 AM and are near the highs reached at 4:00 AM EST. Most opened with a gap-down following an up Tuesday.

Up Down Last Notes
DAX +53.59 (+0.51%)   10646.47
  • On a uptrend since 7:00 AM on Aug 22 2016 on 30-minute charts
FTSE-100   -13.48 (-0.23%) 6853.00
  • It has been down four out of past six trading days
  • Tuesday was bullish engulfing
CAC-40 +28.44 (+0.6%)   4449.89
  • A bullish engulfing of a positive Tuesday
IBEX +83.10 (+1.00%) 8664.30
  • A bullish engulfing of a positive Tuesday
FTSE MIB +146.02 (+0.9%) 16924.07
Swiss Market Index +17.34 (+0.2%) 8218.95
  • A bullish engulfing of a positive Tuesday
STOXX 600 +1.93 (+0.6%) 345.53

Currencies

Up Down Last Notes
US Dollar Index +0.276   94.770
EUR/USD   -52.4 pips 1.12544
GBP/USD +41.0 pips   1.32410
USD/JPY +15.4 pips   100.336

Commodities

Up Down Last Notes
WTI Crude -0.75 (-1.56%) 47.35
  • a break below 45.84 will be bearish in the near term
Natural Gas +0.021 (+0.76%) 2.782
  • Crossed over the 20-D EMA
Gold   -13.0 (-0.97%) 1333.10
  • Crossing below 20-D EMA
  • Breaking below a symmetrical triangle on daily charts near 2-year high
Silver   -0.232 (-1.23%) 18.690
  • Broken below a symmetrical triangle on daily charts near 2-year high on Friday; target near 17.67; support near 17.105
Copper -0.0150 (-0.71%) 2.1000
  • Broken support – 2.1215 low of Jul 11 2016

Yields

  • U.S. Treasury yields are down for the day so far
  • 30-year yield is down by -0.3 basis points to 2.233% and 10-year is down by -0.5 basis points to 1.548%

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 2189.04 2185.33
R1 2191.28 59% 2191.42 55%
R2 2195.66 43% 2197.58 32%
R3 2197.90 46% 2203.67 27%
S1 2184.66 36% 2179.17 36%
S2 2182.42 34% 2173.08 27%
S3 2178.04 24% 2166.92 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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