Market Diary – Wednesday Aug 31, 2016

/ August 31, 2016

Directional Bias For The Day:

ES_2Hr_160831_1

  • The futures are directionless
  • S&P future are fluctuating between 2175.75 and 2172.50 since 3:30 PM on Aug 30
  • For the past few days, at NYSE open, the futures were slightly changed and the day’s trading swung both ways with final close modestly changed from previous one
  • Only one trend day (up) in the past four trading days – three down days of less than -4.3 points and one up day of +11 points
  • On Tuesday at 4:00 PM, S&P future (Sept contract) closed at 2175.00 and the index closed at 2176.12 – a spread of about 0.75 points

Key Levels:

  • Critical support levels for S&P 500 are 2170.72, 2164.41, and 2160.39
  • Critical resistance levels for S&P 500 are 2177.49, 2183.48 and 2187.94
  • Pre-NYSE session open, futures price action is sideways; at 8:30 AM, S&P 500 future was down by -1.00, Dow was down by -13 and NASDAQ was down by -3.25

Economic Data:

Report Current Est. Prev.
U.S. ADP Non-Farm Employment Change 177K 174K 179K
U.S. Chicago PMI (9:45 AM) 51.5  54.1 55.8
  U.S. Pending Home Sales (10:00 AM)  1.3%  0.7% -0.8% 
 

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
  • Tuesday was a red harami candlestick indicating indecision
  • A rally above and close above 2193.42 will nullify the abandoned baby top reversal formed on Aug 24
  • 9-period RSI is diverging and showing a downtrend line; for rally to continue the down trend line needs to be broken
  • Uptrend since June 28th with one pullback; last swing low 2147.58 on Aug 2
  • Mostly sideways move since August 5
  • 61.8% retracement from last low is 2116.59
2-Hour (e-mini future)
  • Drifting lower since 12:00 Noon high of 2182.25 on Aug 29
  • Still in downtrend – lower high, lower lows since 10:; AM on Aug 23; will break if future rise above 2186.75
  • Uptrend line from Aug 2 low was broken on Aug 24; it is acting as a resistance on the bounce
  • A downtrend line since 10:00 AM on Aug 23; a rise to 2185.00 will break it
  • Last pattern – a symmetrical triangle – failed on Aug 24
  • Emerging double top pattern did not last as the price rose above the low of 2165.50 between the two highs of 2190.75 and 2191.50
  • Previous pattern – a rectangle trading range – is morphing into a broadening pattern with horizontal upper limit
30-Minute (e-mini future)
  • Uptrend since 2:30 PM Aug 26 – higher lows, higher highs; though under a downtrend line with two touches since 10:00 AM on Aug 23
  • Emerging pattern – a down-sloping flag – of Tuesday broke to the down side during 10:00 AM bar
  • Within an ascending triangle since 2:00 PM low of Aug 30 with high of 2176.50

Before NYSE Session Open

TRAN_D_160830_EoDMajor U.S. indices were mixed on Tuesday. The best showing was by Dow Jones Transportation Average, which rose by +49.82 or +0.6%. Unlike, Dow Jones Industrial Average, it has not made a new high since November 2014. S&P 500, Dow Jones Industrial Average and NASDAQ Composite made harami candlestick pattern indicating indecision.

On Tuesday:

Up Down Last Notes
S&P 500   -4.26 or -0.2%  2176.12
  • Critical resistance of 2187.94, the Aug 26 high
Dow Jones Industrial Average    -48.69 or -0.3% 18454.30
  • At 50-day EMA
NASDAQ Composite   -9.34 or -0.2% 5222.99
  • Just above 50-day EMA
Russell 2000 +1.09 or +0.1%   1246.03

Still Asian Session

Asian bourses were mixed on Wednesday:

Up Down Last Notes
Shanghai Composite  +10.81 or +0.4%   3085.49
  • A down-sloping flag is in progress since Aug 15, which was 2016  high
  • 50-day EMA crosses above 200-day SMA
Hang Seng   -39.23 or -0.2%  22976.88
  • Next resistance – 2016 high of 23193.90
Nikkei 225  +162.04 or +1.0%   16887.40
  • At a resistance level – upper limit of an ascending triangle on daily charts
S&P/ASX 200   -45.30 or -0.8%  5433.00
  • Broken below critical support of 5465.70 forming an ABCD pattern with target near 5370 level
Sensex  +109.16 or +0.4%   28452.17
  • Follow through on the break of the resistance of the upper limit of a rectangle trading box in progress since Jul 12; target near 28950
Kospi Composite   -5.09 or -0.2%  2034.65
  • 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 8:30 AM.

Up Down Last Notes
DAX   -26.09 or -0.2%  10631.55
  • Broken above weekly downtrend line since April 2015 and with two touches
  • At 89-week SMA
FTSE-100  -0.74 or -0.0% 6820.06
  •  At 20-day EMA
CAC-40  +20.74 or +0.5%   4478.23
IBEX  +74.80 or +0.8%   8760.20
FTSE MIB +115.74 or +0.7%   17008.27
Swiss Market Index   -7.41 or -0.1%  8228.60
STOXX 600 +0.65 or +0.2%   345.40

Currencies

Up Down Last Notes
US Dollar Index  +0.179   96.220
  • Resistance at 96.465
EUR/USD   -1.0 pips  1.11243
GBP/USD   -51 pips  1.30950
USD/JPY +5.0 pips   103.472

Commodities

Up Down Last Notes
WTI Crude    -0.45 or -1.0% 45.90
Natural Gas  +0.011 or +0.4%   2.838
Gold   -7.8 or -0.6%  1309.90
Silver +0.013 or +0,1%    18.59
Copper -0.0010 or -0.0%  2.0680

Yields

Up Down Last Notes
30-Year Treasury +1.2 basis points   2.246%
10-Year Treasury +0.5 basis points   1.575%

Pivot Levels:

S&P 500 rose 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 2176.27 2175.08
R1 2182.12 59% 2181.67 55%
R2 2188.13 43% 2188.08 32%
R3 2193.98 46% 2194.67 27%
S1 2170.26 36% 2168.67 36%
S2 2164.41 34% 2162.08 27%
S3 2158.40 24% 2155.67 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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