Market Diary – Thursday Sep 01, 2016

/ September 1, 2016

Directional Bias For The Day:

ES_2Hr_160901_1

  • The futures are higher
  • S&P futures reached a high of 2177.25 at the European session open and are now below the resistance at 2176.50 level, the high that has sustained tests on past two days
  • 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; Wednesday was no exception, though the range was slightly larger
  • Only one trend day (up) in the past five trading days – three down days of around -5 points and one up day of +11 points
  • On Wednesday at 4:00 PM, S&P future (Sept contract) closed at 2168.75 and the index closed at 2170.95 – a spread of about 2.25 points

Key Levels:

  • Critical support levels for S&P 500 are 2165.20, 2161.35, and 2156.26
  • Critical resistance levels for S&P 500 are 2176.23, 2182.27 and 2187.94
  • Pre-NYSE session open, futures price action is to the upside; at 8:15 AM, S&P 500 futures was up by +3.50, Dow was up by +25 and NASDAQ was up by +11.75

Economic Data:

Report Current Est. Prev.
U.S. Unemployment Claims  263K 265K 261K
U.S. Revised Nonfarm Productivity  -0.6% -0.6% -0.5%
U.S. ISM Manufacturing PMI (10:00 AM) 49.4  52.0 52.6 
 U.S. Construction Spending (10:00 AM) 0.0%   0.6%  0.9%

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
  • Last swing low, 1991.68, was reached on June 27, 2016
Daily
  • Wednesday was and down and then up day still indicating indecision but with larger range following Tuesday’ smaller red harami candlestick
  • 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
  • Break below intermediate low of 2165.50 (Aug 17)between the double top highs of 2190.75 (Aug 15) and 2191.50 (Aug 23) did not last
  • Previous pattern – a rectangle trading range – is morphing into a broadening pattern with horizontal upper limit
30-Minute (e-mini future)
  • Uptrend since 12:30 PM Aug 30 – higher lows, higher highs; though under a downtrend line with two touches since 10:00 AM on Aug 23
  • Broke the previous higher-high/higher-low sequence from Aug 26 to Aug 29 on Aug 31
  • Facing a resistance at 2176.50, the high that it could not overcome for the past two days
  • Wednesday’s emerging pattern – an ascending triangle – broke to the down side but did not go far

Before NYSE Session Open

SPX_D_160831_EoDMajor U.S. indices were down on Wednesday, though they all recovered majority of their intraday losses by the close. For the past many days they are trading within a narrow range of 2-3%. Dow Jones Industrial Averages is within 18668.44 and 18247.79 since July 12. S&P 500 is within 2193.81 and 2147.58 since July 12. NASDAQ Composite is in the range of 5275.74 and 5186.25 since Aug 25. Russell 2000 is the only one that is showing an upward slope in its progression.

On Wednesday:

Up Down Last Notes
S&P 500   -5.17 or -0.2%  2170.95
  • Critical resistance of 2187.94, the Aug 26 high
  • Critical support of 2160.39, the Aug 26 low
Dow Jones Industrial Average    -53.42 or -0.3% 18400.88
  • Crossed below 20-day EMA
NASDAQ Composite   -9.77 or -0.2% 5213.22
  • At 50-day EMA
Russell 2000   -6.12 or -0.5%  1239.91
  • Bouncing of 20-day EMA

Still Asian Session

Asian bourses were mixed on Thursday:

Up Down Last Notes
Shanghai Composite   -22.19 or -0.7%  3063.30
  • A down-sloping flag is in progress since Aug 15, which was 2016  high
  • 50-day EMA crosses above 200-day SMA
Hang Seng  +185.46 or +0.8%   23162.34
  • Bullish engulfing large candlestick
  • Next resistance – 2016 high of 23193.90
Nikkei 225  +39.44 or +0.2%   16926.84
  • At a resistance level or 16943.67 – upper limit of an ascending triangle on daily charts
S&P/ASX 200   -17.40 or -0.3%  5415.60
  • Broken below critical support of 5465.70 forming an ABCD pattern with target near 5370 level
Sensex   -28.69 or -0.1%  28423.48
  • Pause after the break of the resistance of the upper limit of a rectangle trading box in progress since Jul 12; target near 28950
Kospi Composite   -1.93 or -0.1%  2032.72
  • Still in a uptrend on daily timeframe; last swing low 1993.00 reached on Aug 3
  • Bouncing off 50-day EMA

European Session

In pre-US session, the European stock markets are to the upside at 8:30 AM.

Up Down Last Notes
DAX  +37.52 or +0.4%   10630.21
  • Broken above weekly downtrend line since April 2015 and with two touches
  • At 89-week SMA
FTSE-100  -8.02 or -0.12% 6773.49
  •  Crossed below 20-day EMA
CAC-40 +39.94 or +0.9%   4478.16
IBEX +148.40 or +1.7%   8865.20
  •  Rising above 200-day EMA and 39-week SMA
FTSE MIB +207.90 or +1.2%   17151.28
  •  Rising above a resistance of 17122.82, the high point reached after Brexit on Aug 1
Swiss Market Index  +5.46 or +0.1%   8207.59
STOXX 600 +2.59 or +0.8%   346.12

Currencies

Up Down Last Notes
US Dollar Index  +0.088   96.085
  • Resistance at 96.465
  • Struggling to stay above 50-day EMA after climbing above it on Aug 30
EUR/USD   -0.7 pips  1.11375
GBP/USD  +13 pips   1.32530
USD/JPY   -1.9 pips  103.854

Commodities

Up Down Last Notes
WTI Crude    -0.44 or -1.0% 44.26
Natural Gas   -0.021 or -0.7%  2.866
Gold   -2.3 or -0.1%  1309.90
Silver +0.143 or +0,8%    18.77
Copper  +0.0135 or +0.7%   2.0830

Yields

Up Down Last Notes
30-Year Treasury +4.0 basis points   2.268%
10-Year Treasury +4.6 basis points   1.614%

Pivot Levels:

S&P 500 is below 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 2168.04 2168.42
R1 2176.04 27% 2177.33 25%
R2 2181.14 41% 2185.17 30%
R3 2188.48 46% 2194.08 25%
S1 2163.60 25% 2160.58 25%
S2 2156.26 51% 2151.67 43%
S3 2151.16 44% 2143.83 35%

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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