Morning Notes – Tuesday December 6, 2016

/ December 6, 2016

Directional Bias For The Day:

S&P 500 eMini Futures (30-minute) 6-Dec-16 8:30 AM

  • The futures are drifting higher
  • Near the upper limit of an ascending triangle on 30-min chart
  • European stocks are higher and trending up since early session
  • Odds are for an up to sideways day
  • Watch out for break of key levels for the futures

Markets Around The World

  • Markets in the East were mostly up – only Shanghai Composite declined by -0.2%
  • European markets are up and moving up since 3:00 AM
  • Dollar index, GBP/USD and USD/JPY are up; EUR/USD is down
  • Commodities are mostly down – only NatGas is up
  • 10-yrs yield is at 2.387, which is lower than December 2 close of 2.390; 30-years at 3.0660% up from 3.061% on Friday

Key Levels:

  • Critical support levels for S&P 500 are 2200.77, 2194.09 and 2188.37
  • Critical resistance levels for S&P 500 are 2209.42, 2214.10 and 2218.88
  • Key levels for eMini futures: break above 2209.00, high at 8:36 AM, and break below 2203.75, the low of 6:06 AM

Pre-Open

  • Pre-NYSE session open, futures price action is to the upside – at 8:45 AM, S&P 500 futures were up by +8.00, Dow down by +80.00 and NASDAQ by +21.25
  • On Monday, at 4:00 PM, S&P future (Dec contract) closed at 2203.50 and the index closed at 2204.71 – a spread of about 1.25 points; futures closed at 2204.25 for the day

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

Monthly
  • Up trend since Feb 08, 2016
Weekly:
  • Candlestick for the last week was a large harami candle, within a larger green candle
  • Uptrend resumed; broken above a downtrend line since August 15 high
  • Above an 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 the low on June 27, 2016
  • Broke below a small bearish ABCD pattern with a downside target near 2105.30 (100% – met), 2076.77 (138.2% – came close), 2067.96 (150%), 2059.14 (161.8%)
  • Moved above 2193.81, which nullified the break below 2015 high made in early November
  • Above 39-week SMA and 89-week SMA
Daily
  • Gapped up at the open after pulling back for five days
  • Resistance level at November 25 high of 2213.35; Support levels are: 1) 2179.99, the high point reached on September 22; and 2) 2163.85, the 38.2% Fibonacci retracement of the rally from the low of November 4.
  • Above 100-day, 200-day, 50-day and 20-day SMA
  • Sequence of higher highs and higher lows
2-Hour (e-mini future)
  • Trading a narrow range following a 23+ points gain during the December 5 2:00 AM candle – bounded by high of 2208.75 and the low of 2198.00
  • Up trend since 6:00 PM on December 4; but still below November 30 high;
  • Above 20-bar EMA which is crossed above 50-bar EMA at 4:00 PM on December 5
30-Minute (e-mini future)
  • Breaking above a resistance level near 2208-to-2209
  • Forming an ascending triangle – upper limit 2209
  • Above an up sloping 20-bar EMA, which is above a rising 50-bar EMA

Previous Session

S&P 500 5-Dec-16U.S. indices advanced on Monday, December 5 2016. Major indices gapped higher at the open and then held on to the gains.

Dow Jones Industrial Average and Dowa Transportation Average were the only one to close below their open price. Industrial also made an all time new high.

Indices made the high for the day in the first hour of trading. Then they retreated slowly till 2:30 PM. After that they recovered only a part of the late-morning and early-afternoon decline.

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