Morning Notes – Thursday January 5, 2017

/ January 5, 2017

Directional Bias For The Day:

  • The futures are drifting higher since 7:30 AM but are below previous close
  • Futures bounded by a downtrend line on 2-hour timeframe
  • Odds are for an up to sideways day

Markets Around The World

  • Markets in the East were mixed – Tokyo and Seoul were down; Shanghai, Hong Kong, Sydney and Mumbai were up
  • European markets are mixed – Germany and France are down, Italy, Spain and Switzerland are up; STOXX 600 is down
  • Dollar index, GBP/USD and USD/JPY are down; EUR/USD is up
  • Commodities are mixed; WTI crude, gold and silver are up; NatGas and copper are down
  • 10-yrs yield is at 2.419, down from Jan 4 close of 2.452; 30-years is at 3.030% down from 3.045% on Jan 4

Key Levels:

  • Critical support levels for S&P 500 are 2261.60, 2257.32 and 2245.13
  • Critical resistance levels for S&P 500 are 2277.33, 2279.61 and 2286.40
  • Key levels for eMini futures: break above 2267.25, high at 2:00 PM on January 4, and break below 2258.75, the low of 6:00 AM

Pre-Open

  • Pre-NYSE session open, futures price action is to the down side – at 9:15 AM, S&P 500 futures were down by -2.50, Dow by -7.00 and NASDAQ is up by +5.25
  • On Wednesday, at 4:00 PM, S&P future (March contract) closed at 2264.75 and the index closed at 2270.75 – a spread of about 6.00 points; futures closed at 2264.25 for the day; the fair value is +0.50

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

Monthly
  • Confirmed Uptrend
  • Uptrend resumption since Feb 08, 2016 after a pull back of -15.2%
Weekly:
  • Candlestick for the last week was a large bearish engulfing after two weeks of small body candles
  • Broke above a down-sloping flag on November 14, 2016; first target is 2285.92; next 2363.14
  • Last swing low, 2083.79, was the low on November 4, 2016
  • Above 39-week SMA and 89-week SMA
Daily
  • Below a down trend line since December 13 high of 2277.53
  • Broke below a symmetrical triangle on Dec 28; target of 2231.16 was almost reached on Dec 30 (low of 2233.62)
  • Above 100-day, 200-day, 50-day and 20-day SMA
  • Sequence of higher highs and higher lows
  • Last swing low 2263.62
2-Hour (e-mini future)
  • Emerging down-sloping flag; upper limit bounded by 2273.00, 2269.50 and 2265.50; lower limit bounded by 2248.50 and 2242.75; the lower limit was breached once to reach a low of 2233.62
  • Near the upper limit which was touched at 2:00 PM on Jan 4
30-Minute (e-mini future)
  • Emerging down sloping flag since 2:00 PM on Jan 4; break-out point is near 2263.25; target is 2286.50
  • At a flattening 50-bar EMA and a drooping 20-day EMA

Previous Session

U.S. indices advanced on Wednesday, January 4 2017. Indices are trading within a narrow range since Dec 12. Dow Jones Industrial Average is trading within a horizontal box, S&P 500 is within a down sloping flag and NASDAQ Composite is forming a broadening pattern.

Russell 2000 is broke above a descending triangle on Jan 4. The resistance is at 1380.53, the high of Dec 9. The Dow Transportation Average is in a down trend since making the high on Dec 9. A rise above 9170.17 will break the trend.

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