Directional Bias For The Day:
- The futures were little changed at 8:30 AM
- The day after Labor Day has been bullish for the market with average gains of +0.5% over the last 21 years
- On Friday at 4:00 PM, S&P future (Sept contract) closed at 2178.50 and the index closed at 2179.98 – a spread of about 1.50 points
Key Levels:
- Critical support levels for S&P 500 are 2173.59, 2170.67, and 2164.07
- Critical resistance levels for S&P 500 are 2184.87, 2187.94 and 2193.30
- Pre-NYSE session open, futures price action is to the upside; at 8:15 AM, S&P 500 futures was up by +1.75, Dow was up by +19 and NASDAQ was up by +4.75
Economic Data:
| Report |
Current |
Est. |
Prev. |
| U.S. ISM Non-Manufacturing PMI (10 AM) |
51.4 |
55.4 |
55.5 |
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 |
- Price bounced off 20-day and 10-day EMAs following few days of indecisive action
- A rally 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
- Sequence of lower high / lower lows since AM on Aug 23 broken in post-NFP rally on Friday
- A downtrend line since 10:00 AM on Aug 23 also broken on Friday
- Forming a pennant with high of 2183.75 reached at 10:00 AM on Friday; a rise above 2182.25 will signal a break to the upside
- Previous pattern – a rectangle trading range – is morphing into a broadening pattern with horizontal upper limit
|
| 30-Minute (e-mini future) |
- A symmetrical triangle forming (pennant in 2-hour timeframe)
- Mostly sideways since Friday’s close
|
Before NYSE Session Open
Friday’s Non-Farm Payroll report changed market’s expectation about the Fed-Fund rate increase. This turned out to be quite bullish for major U.S. indices. Small-cap, Russell 2000, was the biggest winner.
On Friday:
|
Up |
Down |
Last |
Notes |
| S&P 500 |
+9.12 or +0.4% |
|
2179.98 |
- Gapped up on Friday and maintained the gap
- Critical resistance of 2187.94, the Aug 26 high
- Critical support of 2147.58, the Aug 2 low
|
| Dow Jones Industrial Average |
+72.66 or +0.4% |
|
18491.96 |
- Crossed above 20-day and 10-day EMA
- Bounced off 50-day EMA on September 1
|
| NASDAQ Composite |
+22.69 or +0.4% |
|
5227.21 |
- Gapped up on Friday and maintained the gap
- Bounced off 50-day EMA
|
| Russell 2000 |
+12.03 or +1.0% |
|
1251.82 |
- Range expansion day on Friday
- Bounce of 20-day EMA on September 1
|
Asian Session
Asian bourses were mostly up on Tuesday:
|
Up |
Down |
Last |
Notes |
| Shanghai Composite |
+18.62 or +0.6% |
|
3090.71 |
- The down-sloping flag since Aug 15 broken to the upside on Tuesday
- Uptrend since Jan 25 2016
|
| Hang Seng |
+138.13 or +0.6% |
|
23787.68 |
- Gapped up on Monday above the resistance – Oct 2015 high of 23423.64 on weekly charts
- Tuesday was the follow-through on the gap-up
|
| Nikkei 225 |
+44.35 or +0.3% |
|
17081.98 |
- Gapped up on Monday above the resistance of 16943.67 – upper limit of an ascending triangle on daily charts – but closed below the open
- Tuesday was green harami candle within the red candlestick
|
| S&P/ASX 200 |
|
-16.00 or -0.3% |
5413.60 |
- Monday was bullish engulfing candle
- Still in the CD leg of bearish ABCD pattern with target near 5370
- Prior support is acting as a resistance
- On 89-week SMA
|
| Sensex |
+445.91 or +1.6% |
|
28978.02 |
- Gapped-up above the resistance of July 2015 high of 26576.32
- 100% extension target from the breakout of a rectangle trading box is reached
- Next target is 161.8% extension, near 29125
|
| Kospi Composite |
+6.45 or +0.3% |
|
2066.53 |
- Gapped up on Monday; Tuesday was follow-through day
- 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 mostly to the upside at 8:30 AM.
|
Up |
Down |
Last |
Notes |
| DAX |
+43.97 or +0.4% |
|
10716.19 |
- Broken above weekly downtrend line since April 2015 and with two touches
- Bouncing off 89-week SMA and at 50-day EMA
|
| FTSE-100 |
|
-27.35 or -0.4% |
6852.07 |
- Crossed above 20-day EMA on Monday
- Bouncing off 10-week SMA
|
| CAC-40 |
+9.53 or +0.2% |
|
4541.08 |
- Struggling to overcome the resistance created by May 31 high of 4536.86
|
| IBEX |
+26.20 or +0.3% |
|
8959.50 |
- Crossed above falling 200-day SMA and 39-week SMA on Friday
- Next resistance at 9360.20, the of a reversal day on April 27
|
| FTSE MIB |
+18.70 or +0.1% |
|
17209.14 |
- Above 17122.82, the high point reached after Brexit on Aug 1
- Breaking out of a horizontal trading range
|
| Swiss Market Index |
+14.86 or +0.2% |
|
8325.3 |
- Bounced off a rising 50-day EMA and a falling 200-day SMA on Friday
- Making new 2016 high
|
| STOXX 600 |
+0.54 or +0.2% |
|
351.16 |
- Bounced off a rising 50-day EMA and a falling 39-week SMA on Friday
|
Currencies
|
Up |
Down |
Last |
Notes |
| US Dollar Index |
|
-0.229 |
95.615 |
- In the middle of rectangle trading range since January 2015 on weekly charts
- Finding resistance at 89-week SMA and 50-day SMA
|
| EUR/USD |
|
-2.8 pips |
1.11605 |
- At 200-day and 50-day SMAs
- Falling below the downtrend line that it broke on August 16 to the upside
|
| GBP/USD |
+45.0 pips |
|
1.33510 |
- At the upper limit of a symmetrical triangle at 30-year low levels
- Crossed above a falling 5-day SMA on September 1
|
| USD/JPY |
+0.2 pips |
|
103.289 |
- Struggling to stay above a falling 50-day SMA
|
Commodities
|
Up |
Down |
Last |
Notes |
| WTI Crude |
|
-0.53 or -1.2% |
43.91 |
- At flattening 39-week SMA
- Off Monday’s high of 46.53
|
| Natural Gas |
|
-0.046 or -1.6% |
2.810 |
- Broken above an up-sloping flag on Aug 25 and is back at the downtrend line, which is acting as a support
|
| Gold |
+11.8 or +0.9% |
|
1338.50 |
- Bouncing off the lower line of a slight down-sloping channel
|
| Silver |
+0.339 or +1,8% |
|
19.71 |
- Above the lower limit of a broken descending triangle
- A down-sloping flag is emerging
|
| Copper |
+0.0080 or +0.4% |
|
2.0860 |
- At the lower limit of a symmetrical triangle – weekly charts – at the low levels since 2009
|
Yields
|
Up |
Down |
Last |
Notes |
| 30-Year Treasury |
|
-0.5 basis points |
2.266% |
- Crossing above a falling 50-day SMA
- In the middle of a symmetrical triangle
|
| 10-Year Treasury |
+0.3 basis points |
|
1.599% |
- Below upper limit of an ascending triangle
|
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 |
2179.48 |
|
2175.33 |
|
| R1 |
2185.37 |
59% |
2186.42 |
55% |
| R2 |
2190.76 |
44% |
2194.83 |
32% |
| R3 |
2196.65 |
46% |
2205.92 |
27% |
| S1 |
2174.09 |
36% |
2166.92 |
36% |
| S2 |
2168.20 |
34% |
2155.83 |
27% |
| S3 |
2162.81 |
24% |
2147.42 |
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
Friday’s Non-Farm Payroll report changed market’s expectation about the Fed-Fund rate increase. This turned out to be quite bullish for major U.S. indices. Small-cap, Russell 2000, was the biggest winner.
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