Market Remarks

Morning Notes – Tuesday September 13, 2016

Sunil Sharma

Directional Bias For The Day:

  • The futures facing downward pressure
  • Futures drifting down since 4:00 PM high on Monday
  • Odds are for a down day; a break above 2140-2142 will change the market tone
  • Futures are sideways since Asian session on Sunday (U.S. time) after falling more in the after-market trading post-NYSE close on Friday
  • Futures off the lows of 2100.25 by more than ten points
  • Markets in Asia were mixed and most did not follow the up-Monday in the U.S.
  • European markets are mixed but most are down from open
  • On Monday, at 4:00 PM, S&P future (Dec contract) closed at 2151.25 and the index closed at 2159.04 – a spread of about 8.75 points

Key Levels:

  • Critical support levels for S&P 500 are 2139.05, 2131.25, and 2119.12
  • Critical resistance levels for S&P 500 are 2159.04, 2169.08 and 2181.02
  • Pre-NYSE session open, futures price action is to the downside; at 8:45 AM, S&P 500 futures was down by -17.50, Dow was down by -141 and NASDAQ was down by -29.75

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

Monthly
  • Up trend since Feb 08, 2016
Weekly:
  • Current uptrend under pressure
  • Fallen below an up-trending 10-week SMA
  • 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
  • Uptrend under pressure
  • Price back at 50-day EMA after a dip below
  • Piercing candle following a range expansion red candle
  • 38.2% retracement from last low is 2116.59 and was not breached
2-Hour (e-mini future)
  • After making a high of 2156.00 during 2:00 PM candle on Monday, it is drifting down
  • The bounce following the decline from the high of 2189.25 to 2100.25 reached 61.8% retracement
30-Minute (e-mini future)
  • 38.2% retracement of the bounce from the lows of 2100.25 to the high of 2156.00 is 2134.70 – the low reached during European session was 2135.50
  • Since Monday’s 4:00 PM high, price is making a flag pattern
  • A move above 2141-2142 will trigger the break of the flag pattern

Before NYSE Session Open

On Monday, major U.S. indices made a piercing pattern. In this pattern, a long black (red) candle is followed by a gap-down open during the next session. This session also finishes as a strong, white candle that closes more than half-way into the red candle. In a downturn, this pattern forms a reversal. Since we are not in a downturn this is not an ideal piercing candlestick pattern. However, it still has implications as a reversal pattern if on Tuesday there is a follow up.

On Monday:

Up Down Last Notes
S&P 500 +31.23 or +1.5%   2159.04
  • Strong piercing candle brings to 50-day EMA
  • Recovered 58% of Friday’s loss
  • 50% retracement from last swing low is at 2092.75
Dow Jones Industrial Average  +239.62 or +1.3%   18325.07
  • Recovered 61% of Friday’s loss
  • 38.2% retracement from last swing low  is 18055.13
NASDAQ Composite  +85.98 or +1.7%   5211.89
  • Recovered 64% of Friday’s loss
  • Next swing low is at 5109.80
Russell 2000  +16.66 or +1.4%   1235.87
  • Recovered 43% of Friday’s loss
  • Next swing low is at 1198.73
Dow Jones Transportation Average  +103.31 or +1.3%   7925.90
  • Recovered 41% of its loss
  • Next swing low is at 7804.62
VIX   -2.34 or -13.4%  15.16

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