Market Remarks

Morning Notes – Friday September 16, 2016

Sunil Sharma

Directional Bias For The Day:

  • The futures are down since 6:00 AM
  • September’s Triple Witching Friday has been good for Dow Jones Industrial Average in the recent years – up 10 of last 13 years
  • Deutsche Bank decline more than 8% in Europe and that is putting down pressure on futures
  • Market direction lacks clarity
  • Key move: Break above a downtrend line of 30-minute chart (above 2136) or break below 6:00 AM low (below 2127.50)
  • Markets in Asia were mostly up with only China being down; Japan, Hong Kong, South Korea, India and Australia were up
  • European markets are down and for most  the daily charts are looking bearish except for Swiss market
  • On Thursday, at 4:00 PM, S&P future (Dec contract) closed at 2140.00 and the index closed at 2147.26 – a spread of about 7.25 points

Key Levels:

  • Critical support levels for S&P 500 are 2137.84, 2129.31 and 2119.92
  • Critical resistance levels for S&P 500 are 2151.31, 2158.26 and 2187.21
  • Pre-NYSE session open, futures price action is to the down side; at 9:00 AM, S&P 500 futures was down by -3.50, Dow was down by -29 and NASDAQ was up by +4.75

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
  • Thursday was bullish engulfing of Wednesday’s harami doji; still less than half way within Friday’s big red candle, which had gapped down
  • 38.2% retracement from last low is 2116.59 and is  not breached
2-Hour (e-mini future)
  • The sequence of lower high / lower low since September 9 afternoon high of 2156.00 is broken but the trend hasn’t yet reversed
  • Tracing a symmetrical triangle – for break above 2144.00 is the limit; for break bel0w it is 2107.00
30-Minute (e-mini future)
  • Gradual decline since September 15 afternoon high and is at the downtrend line from but nearing it from lows\

Before NYSE Session Open

Thursday major U.S. indices made bullish engulfing candlestick patterns. For the last few market has been whipsawing near the open before getting into the trend for the day. It did the same on Thursday. Futures declined half-hour before NYSE open but the bottomed and reversed and closed near the high for the day. However, the technical damage due to the recent price swing hasn’t been recovered.

Prior to last week, most of the indices were trading in rectangle trading range, which they broke to the downside on September 9. Thursday’s bounce has brought  Dow Jones Industrial Average and S&P 500 to the lower limit of the range, which is acting as a resistance. NASDAQ Composite has the best recovery and it is back in the middle of the range. Russell 2000 was making an up-sloping trading channel and is quite below it.

 

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