Market Diary – Friday Aug 26, 2016

/ August 26, 2016

Directional Bias For The Day:

ES_2Hr_160826_1

  • The futures are directionless and awaiting Chair Yellen’s speech at Jackson Hole at 10:00 AM
  • Swing low of 2168.50 is critical for S&P 500
  • On Thursday at 4:00 PM, S&P future (Sept contract) closed at 2171.75 and the index closed at 2172.47 – a spread of about 0.75 points

Key Levels:

  • Critical support levels for S&P 500 are 2168.50, 2164.48, and 2159.21
  • Critical resistance levels for S&P 500 are 2179.72, 2183.00 and 2186.99
  • Pre-NYSE session open, futures price action is sideways; at 8:45 AM, S&P 500 future was up by +0.50, Dow was up by +2 and NASDAQ was down by -2.75

Economic Data:

Report Current Est. Prev.
U.S. Prelim GDP (8:30 AM) 1.1% 1.1% 1.2%
U.S. Prelim GDP Price Index (8:30 AM) 2.3% 2.2% 2.2%
U.S. Goods Trade Balance -59.3B -62.3B -63.3B
 

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
  • A narrow range Thursday at the lows of Wednesday, which was an abandoned baby top reversal near all time high
  • 9-period RSI is diverging and showing 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
  • Last pattern – a symmetrical triangle, which was broken to the upside – is nullified
  • Also failed to materialize is an ascending triangle, which was emerging
  • The current pattern is a rectangle trading range – high 2191.50 and low 2165.50 – with price bouncing off the lower bound
30-Minute (e-mini future)
  • Downtrend since 10:00 AM Aug 23; lower lows, lower highs
  • Since 3:30 PM on Aug 24, a rectangle trading box is emerging with high of 2177.25 and low of 2167.50 reached at 11:00 AM and 3:00 PM respectively on Thursday
  • A narrow band since 4;00 PM NYSE close on Thursday

Before NYSE Session Open

SPX_D_160825_EoDMajor U.S. indices traded in a narrow range following the abandoned baby top pattern on Wednesday. Thursday started with S&P 500 future -5.00 below previous close. The Index made a low of 2167.75 within the first half of trading, which was tested during the last hour and was not broken. The high was reached at 11:00 AM and then the markets generally drifted lower.

On Thursday:

Up Down Last Notes
S&P 500   -2.97  (-0.1%) 2172.47
  • Thursday low of 2169.74 and previous swing low of 2168.50 are critical
Dow Jones Industrial Average   -33.07  (-0.2%) 18448.41
  • Is at the lowest point since Aug 5, which was a gap-up open day
  • Gap between 18402 and 18397.87 is critical
NASDAQ Composite   -5.49  (-0.1%) 5212.20
  • Is at the previous swing low of 5197.23
Russell 2000 +2.75 or +0.2%   1240.00
  • Critical level is 1221.72, low reached on Aug 17

Still Asian Session

Asian bourses were mixed on Friday:

Up Down Last Notes
Shanghai Composite +1.98 or +0.1%   3070.31
  • A down-sloping flag is in progress since Aug 15, which was 2016  high
Hang Seng +82.67 +0.4%   22909.54
  •  Facing resistance at down trend line from Aug 17 high on 30-minute charts
Nikkei 225   -195.24  (-1.2%) 16360.71
  • Gap-down open and a large red candle day
  • Next support at 15921.04, low of Aug 4
S&P/ASX 200   -26.40  (-0.5%) 5515.50
  • At the uptrend line from the low of Aug 3; if broken it will form a up-sloping flag with target near 5428
Sensex   -53.66  (-0.2%) 27782.25
  •  Near the lower limit of a rectangle trading box in progress since Jul 12
Kospi Composite   -5.42  (-0.3%) 2037.50
  • Still in a uptrend on daily timeframe; last swing low 1993.00 reached on Aug 3

European Session

In pre-US session, the European stock markets are mixed at 7:30 AM, most forming a doji in a narrow trading range

Up Down Last Notes
DAX   -25.12 (-0.2%) 10504.47
  • A doji with high and low so far 30 points away
FTSE-100  +3.13 or +0.06%   6820.03
CAC-40  +0.11 or +0.0%   4406.72
IBEX   -8.40 (-0.1%) 8599.50
FTSE MIB    -80.03 (-0.5%) 16630.75
Swiss Market Index   -26.25 (-0.3%) 8115.03
STOXX 600   -0.32 (-0.1%) 342.02

Currencies

Up Down Last Notes
US Dollar Index   -0.238 94.505
EUR/USD +17.4 pips   1.13014
GBP/USD +27.0 pips   1.32140
USD/JPY   -29.5 pips 100.239

Commodities

Up Down Last Notes
WTI Crude +0.15 or +0.3%   47.48
Natural Gas   -0.028 or -1.0% 2.817
Gold +8.6 or +0.6%    1333.20
Silver  +0.171 or +0.9%   18.66
Copper  +0.0065 (+0.3%)   2.0830

Yields

  • U.S. Treasury yields are down for the day so far
  • 30-year yield is down by -2.4 basis points to 2.240% and 10-year is down by -1.6 basis points to 1.561%

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 2173.74 2172.75
R1 2177.73 27% 2178.00 25%
R2 2183.00 41% 2182.50 30%
R3 2186.99 45% 2187.75 25%
S1 2168.47 25% 2168.25 25%
S2 2164.48 51% 2163.00 42%
S3 2159.21 45% 2158.50 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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