Market Remarks

Market Diary – Thursday September 08, 2016

Sunil Sharma

Directional Bias For The Day:

  • The futures were little changed at 8:30 AM
  • Past many days the price-action has been subdued – the 5-day average range (not ATR) is 0.7% and the average change is +0.1%
  • On Wednesday at 4:00 PM, S&P future (Sept contract) closed at 2185.25 and the index closed at 2186.16 – a spread of about 0.75 points

Key Levels:

  • Critical support levels for S&P 500 are 2182.00, 2179.07, and 2173.59
  • Critical resistance levels for S&P 500 are 2187.87, 2193.17 and 2198.46
  • Pre-NYSE session open, futures price action is unchanged; at 8:30 AM, S&P 500 futures was unchanged, Dow was down by -4 and NASDAQ was down by -2.50

Significant Event:

Report Current Est. Prev.
ECB Press Conference
U.S. Unemployment Claims  259K 264K 263K

The trend and patterns on various time frames for S&P 500 are:

Monthly
  • Up trend since Feb 08, 2016
Weekly
  • Hugging an up-trending 10-week SMA since the week of August 22
  • 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 bouncing 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 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)
  • Making higher highs and higher lows since 10:00 AM low on September 6
  • Nearing resistance at 2190 level, where previous rallies on August 15 and August 23rd petered out
30-Minute (e-mini future)
  • Uptrend since September 11 low at 11:00 AM
  • Uptrend line will break if price falls below 2182.00
  • Up-trend line broken during ECB President Draghi’s press conference Q&A

Before NYSE Session Open

On Wednesday Dow Jones Transportation Average had a range expansion day with a gain of +1.3%. It has been out-performing other indices for the last few days except Russell 2000. Russell 2000 also gained. Major U.S. indices were mixed on Wednesday, though, they closed near the high for the day.

On Wednesday:

Up Down Last Notes
S&P 500   -0.32 or -0.0%  2186.16
  • Critical resistance of 2187.94, the Aug 26 high
  • Critical support of 2157.09, the September 1 low
Dow Jones Industrial Average   -11.98 or -0.1%  18526.14
  • In a rectangle trading box (High=18668 – Low=18247); again rising to upper limit
  • Bouncing off 10-day and 20-day EMAs
NASDAQ Composite +9.02 or +0.2%   5283.93
  • Breaking above a rectangle trading box (High=5275 – Low=5197); target near 5353
Russell 2000 +7.64 or +0.6%   1261.01
  • Trending up within a narrow up-sloping channel

Asian Session

Asian bourses were mixed on Thursday:

Up Down Last Notes
Shanghai Composite +4.03 or +0.1%   3095.95
  • Finding resistance at the upper limit of an ascending triangle on weekly charts
  • Resistance also coincides with a congestion zone formed by reversal I n2015 and high in April 2016
  • Uptrend since Jan 25 2016
Hang Seng +177.53 or +0.7%   23919.34
  • Bullish engulfing candlestick
  • Follow-through of the gap Monday – above the resistance of Oct 2015 high of 23423.64 on weekly charts – continues
Nikkei 225   -53.67 or -0.3%  16958.77
  • Finding support at the broken resistance of 16943.67
S&P/ASX 200   -38.40 or -0.7% 5385.80
  • Finding resistance at a drooping 50-day EMA that it broke below on August 31 following a break down from a descending triangle
  • Next downside target is near 5315 level
  • On flattening 89-week SMA
Sensex +118.92 or +0.4%   29045.28
  • Bullish engulfing candle
  • Next target of break-out of a rectangle trading box is 161.8% extension, near 29125

European Session

In pre-US session, the European stock markets are mostly to the down at 9:00 AM following Draghi Q&A.

Up Down Last Notes
DAX   -174.04 or –1.6%  10578.94
  • Range expansion that reverse last five day’s gain
  • At slightly rising 89-week SMA and 20-day EMA
  • In a rectangle trading box since August 9
FTSE-100 -20.03 or -0.3% 6826.53
  • On September 2 broke above an up-sloping flag and is back it the downtrend line
  • At 10-week SMA
CAC-40   -61.08 or -1.3%  4496.58
IBEX   -7.80 or -0.1%  9007.50
FTSE MIB    -117.25 or -0.7% 17175.59
Swiss Market Index    -35.45 or – 0.4% 8285.54
STOXX 600   -3.45 or -1.0%  347.01

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