Morning Notes – Thursday January 12, 2017

/ January 12, 2017

Directional Bias For The Day:

  • The futures are drifting lower since 4:00 PM on Jan 11
  • Odds are for a down day; watch for break above 2267.75, Asian session high

Markets Around The World

  • Markets in the East were mostly down – Mumbai and Seoul were exceptions
  • European markets are mostly down – Spain is the lone exception
  • Dollar index and EUR/USD are down; USD/JPY and GBP/USD are up
  • Commodities are higher
  • 10-yrs yield is at 2.329%, down from Jan 11 close of 2.370%; 30-years is at 2.917%, also down from 2.957% on Jan 11

Key Levels:

  • Critical support levels for S&P 500 are 2265.27, 2260.45, and 2257.32
  • Critical resistance levels for S&P 500 are 2274.99, 2279.27 and 2282.10
  • Key levels for eMini futures: break above 2267.75, high at 10:30 PM on Jan 11 and break below 2260.75, the low of 4:00 AM

Pre-Open

  • Pre-NYSE session open, futures price action is to the down side – at 8:30 AM, S&P 500 futures were down by -6.25, Dow by -44.00 and NASDAQ by -15.50
  • On Wednesday, at 4:00 PM, S&P future (March contract) closed at 2270.25 and the index closed at 2275.32 – a spread of about 5.00 points; futures closed at 2270.50 for the day; the fair value is -0.25

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 was a large green candle that opened in the middle of previous large bearish engulfing and closed above its highs; this was preceded by 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
  • Emerging broadening pattern since December 12
  • 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)
  • Downward pressure; lower high, lower lows since 12:00 PM on Jan 6
  • Broke above a down-sloping flag at 10:00 AM on Jan 6; fell back into it at 8:00 Am on Jan 9;
  • Flag pattern is morphing in to a broadening pattern
  • Broke the uptrend line from low at 2:00 PM on Dec 30
30-Minute (e-mini future)
  • Two emerging descending triangles; inner triangle was nullified; outer one is still emerging
  • Also potential for a down sloping flag within the descending triangle; greater chances of triangle to prevail but wait for completion
  • Below a downtrend line from the high at 2:00 PM on Jan 6
  • Resistance at 2271.75, the high of 4:30 PM on Jan 11
  • Below falling 50-bar EMA and 20-day EMA

Previous Session

U.S. indices closed higher on Wednesday Jan 11, 2017.

NASDAQ Composite continued its streak of closing at new high but the intra-day high was a tad lower than that on Tuesday.

Dow Jones Industrial Average gained +0.5% but still below the upper bound of the narrow horizontal trading range that it has traded within since December 12. Dow Jones Transportation Average gained +1.0% and broke above the downtrend line that started on December 9. This bodes well for the market.

S&P 500 closed up by +0.3% but is slightly below the upper bound of the emerging broadening pattern since December 12. NYSE Composite index and Wilshire 5000 Total Market Index also closed up and are making a pattern similar to that of S&P 500.

Russell 2000 followed through the bullish engulfing pattern that it made on Tuesday and moved to the middle of the narrow horizontal trading range, which is emerging since mid-December.

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