Morning Notes – Thursday October 20, 2016

/ October 20, 2016

Directional Bias For The Day:

S&P 500 eMini Futures 20-Oct-16 8:45 AM

  • The futures are facing downward pressure following ECB president Mario Draghi’s press conference
  • Turned back at 11:00 PM from the October 14 high of 2143.25
  • Odds are for a down day

Markets Around The World

  • Markets in the East were mixed – Shanghai and Seoul were down and others up
  • European markets are mostly down; they were mostly up before president Draghi’s press conference; Spain being an exception; DAX is making a bearing engulfing
  • Dollar index is up, so are USD/JPY and EUR/USD; GBP/USD is down
  • Commodities are mostly down; except Gold
  • Commodities are mostly down except for gold

Key Levels:

  • Critical support levels for S&P 500 are 2142.74, 2138.15 and 2128.99
  • Critical resistance levels for S&P 500 are 2149.19, 2153.92 and 2161.56
  • Key levels for eMini futures: break above 2141.25, the high of 6:30 AM, for bulls and break below 2132.25, the low of 8:30 AM, for bears

Pre-Open

  • Pre-NYSE session open, futures price action is to the downside; at 8:30 AM, S&P 500 futures were down by -1.75, Dow by -23.00 and NASDAQ is down by -2.25
  • On Wednesday, at 4:00 PM, S&P future (Dec contract) closed at 2138.75 and the index closed at 2144.29 – a spread of about 5.75 points; futures closed at 2138.00 for the day

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; need to rise above 2187.87 to relieve the pressure
  • 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
  • In danger of making a small bearish ABCD pattern; a break below 2119.12 will complete it with a target near 2104 level
Daily
  • Uptrend remains under pressure; need to rise above 2179.99 to relive the pressure
  • Turning down from the previously broken down trend line after a test
  • A break below 2114.74 will change the trend as it would be first lower high / lower low
  • Need to rise above 2149.19 for short term up move
2-Hour (e-mini future)
  • Downtrend since 10:00 AM on September 22 – mostly lower lows and lower highs; advance above 2143.25 will break this sequence
  • Bounce from October 13, 8:00 AM low turned down at 2143.25 at prior support-turned-resistance level but uptrend continues; above the uptrend line
  • Possible emergence of a right-shoulder of an inverse head-and-shoulder pattern; a break above 2143.25 will trigger it
30-Minute (e-mini future)
  • Uptrend since 10:00 AM October 13; At 11:00PM found resistance at the high of October 14, 10:00 AM
  • Turned up in between the 61.8% and 78.6% Fibonacci retracement level of the rally from 10:00 AM October 13 low of 2107.75 to October 14 high
  • A symmetric triangle was broken to the upside; this is within an emerging ascending triangle; upper limit is 2144.50 and lower limit is at 2126.50

Before NYSE Session Open

S&P 500 19-Oct-16On Wednesday, major U.S. indices gradually drifted up after making day’s low I the first half-hour of trading. They lost some steam in the final hour of trading.

Dow Jones Industrial Average, S&P 500 and Russell 2000 exceeded Tuesday’s high before retreating below it. Dow Jones Transportation Average tested the high at 2:00 PM. NASDAQ’s price action was not good as it did not challenge Tuesday’s high, instead, it took a shot at closing the gap of Tuesday.

 

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