Market Remarks

Market Diary – Thursday Aug 25, 2016

Sunil Sharma

Directional Bias For The Day:

  • The futures are lower following an abandoned baby top on Wednesday for S&P 500
  • Odds are for a down day, though there are some strong support nearby
  • On Wednesday at 4:00 PM, S&P future closed at 2174.25 and the index closed at 2175.44 – a spread of about 1.50 points

Key Levels:

  • Critical support levels for S&P 500 are 2168.50, 2162.37, and 2153.50
  • Critical resistance levels for S&P 500 are 2179.72, 2184.92 and 2186.66
  • Pre-NYSE session open, futures price action is to the downside; at 8:00 AM, S&P 500 future was down by -4.00, Dow was down by -36 and NASDAQ was down by -8.75

Economic Data:

Report Current Est. Prev.
 U.S. Core Durable Goods 1.5% 0.4% -0.4%
 U.S. Core Durable Goods 4.4% 3.4% -3.9%
U.S. Unemployment Claims 261K 265K 262K
U.S. Flash Services PMI (9:45 AM) 51.9 51.4

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
  • Abandoned baby top on Wednesday near all time high
  • 9-period RSI divergences and a downtrend line
  • Uptrend since June 28th with one pullback; last swing low 2147.58 on Aug 2
  • Mostly sideways move since August 5.
2-Hour (e-mini future)
  • Uptrend – higher under pressure; next swing low of 2165.50 is critical
  • The beak above a symmetrical triangle at 4:00 AM on Aug 23 failed and the pattern nullified
  • Emerging ascending triangle noted on Aug 24 2016 also failed
  • The current pattern is a rectangle trading range – high 2191.50 and low 2165.50 – with price hovering near the lower bound
30-Minute (e-mini future)
  • Downtrend since 10:00 AM Aug 23; lower lows, lower highs
  • At a double bottom support 2168.75 reached during the last half-hour of NYSE session; intermediate high is 2176.25 reached during early Asian session

Before NYSE Session Open

Major U.S. indices open the day with a gap down on Wednesday following the gap-up open on Tuesday. A subsequent effort to fill the gap failed in early afternoon and most made an abandoned bay top 3-day reversal formation.

On Tuesday:

Up Down Last Notes
S&P 500    -11.46  (-0.5%) 2175.44
  • Abandoned baby top near all time high
  • At 20-D EMA
Dow Jones Industrial Average    -65.82  (-0.4%) 18481.48
  • Same as S&P 500
  • At lowest since Aug 5 2016
NASDAQ Composite    -42.39  (-0.8%) 5217.69
  • Largest range since Aug 5
Russell 2000    -11.33  (-0.9%) 1237.25
  • Still above 20-D EMA

Still Asian Session

Asian bourses were mixed on Thursday:

Up Down Last Notes
Shanghai Composite   -17.55  (-0.6%) 3068.33
  • An almost dragongfly doji
Hang Seng  +6.09 (+0.03%)   22826.87
Nikkei 225   -41.35  (-0.2%) 16555.95
S&P/ASX 200    -19.80  (-0.4%) 5541.90
Sensex    -224.03  (-0.8%) 27835.91
Kospi Composite   -0.84  (-0.04%) 2042.92

European Session

In pre-US session, the European stock markets are mostly lower at 8:30 AM and are near middle of the day’s range.

Up Down Last Notes
DAX   -111.60 (-1.1%) 10526.87
  • Gap down open and the price is at the middle of Tuesday range
  • Struggling to stay above a broken down-sloping flag on weekly timeframe
FTSE-100   -13.47 (-0.2%) 6822.31
  • Near the lowest level since Aug 11
CAC-40    -39.17 (-0.9%) 4396.30
  • Fallen back in the up-sloping flag on weekly timeframe after a brief stay above it
IBEX   -69.40 (-0.8%) 8585.90
  • Facing resistance at 39-Week EMA
FTSE MIB    -187.02 (-0.8%) 16704.61
  • Range bound since Jul 12 2016
Swiss Market Index   -75.53 (-0.9%) 8124.30
STOXX 600   -3.49 (-1.00%) 341.44

Currencies

Up Down Last Notes
US Dollar Index   -0.102 94.625
EUR/USD +29.1 pips   1.12916
GBP/USD -35.0 pips 1.31950
USD/JPY  +7.0 pips   100.521

Commodities

Up Down Last Notes
WTI Crude -0.07 (-0.13%) 46.71
  • a break below 45.84 will be bearish in the near term
Natural Gas +0.020 (+0.72%) 2.817
  • Knocking on a downtrend line since Jul 1 on daily timeframe
Gold   -8.5 (-0.49%) 1323.20
  • Crossing below 50-D EMA
  • Broken below a symmetrical triangle on daily charts near 2-year high
Silver   -0.061 (-0.33%) 18.495
  • Broken below a symmetrical triangle on daily charts near 2-year high on Friday; target near 17.67; support near 17.105
Copper  +0.045 (+0.22%)   2.0810
  • Broken support – 2.1215 low of Jul 11 2016

Yields

  • U.S. Treasury yields are up for the day so far
  • 30-year yield is up by +2.0 basis points to 2.263% and 10-year is up by +1.9 basis points to 1.578%

Pivot Levels:

S&P 500 is belo 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 2177.78 2177.17
R1 2184.32 27% 2185.58 25%
R2 2193.19 41% 2196.17 30%
R3 2199.73 45% 2204.58 25%
S1 2168.91 25% 2166.58 25%
S2 2162.37 51% 2158.17 42%
S3 2153.50 45% 2147.58 34%

Note: The probability of a level breaking is shown above is for the current condition when the price is below 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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