Morning Notes – Tuesday January 17, 2017

/ January 17, 2017

Directional Bias For The Day:

  • The futures are lower
  • Bounce following PM May’s speech is turning down again
  • Odds are for a down day; watch for break above 2267.50, break above a downtrend line on 30-minute timeframe, which was broken earlier in a fake move up

Markets Around The World

  • Markets in the East were mixed: Shanghai, Hong Kong and Seoul were up; Tokyo, Sydney and Mumbai were down
  • European markets are mostly down: only Italy and STOX 600 are up
  • Dollar index is down: USD/JPY, GBP/USD and EUR/USD are up
  • Commodities are mixed: NatGas and copper are down; rude oil, gold and silver are up
  • 10-yrs yield is at 2.327% down from Jan 13 close of 2.380%; 30-years is at 2.9250% down from 2.977% on Jan 13

Key Levels:

  • Critical support levels for S&P 500 are 2267.53, 2259.20 and 2254.25
  • Critical resistance levels for S&P 500 are 2276.47, 2279.27 and 2282.10
  • Key levels for eMini futures: break above 2266.50, high at 7:30 AM and break below 2257.50, the low of 6:30 AM

Pre-Open

  • Pre-NYSE session open, futures price action is to the down side – at 9:00 AM, S&P 500 futures were down by -8.25, Dow by -54.00 and NASDAQ by -16.25
  • On Friday, at 4:00 PM, S&P future (March contract) closed at 2269.75 and the index closed at 2274.64 – a spread of about 5.00 points; futures closed at 2272.50 for the day; the fair value is -2.75

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 narrow body with longer lower shadow than upper shadow; week before it was large green candle than open in the middle of previous large bearish engulfing and closed above the highs
  • Break of the high of week 2-Jan, 2282.10, is critical for the continuation of the uptrend
  • 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
  • Friday’s narrow body with small upper and lower shadow followed a dragonfly candle on Thursday
  • 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, the sequence was broken at 8:00 Am on Jan 13 with a higher high; waiting for a follow up higher low
  • 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
  • Another down-sloping flag emerging within the broadening pattern
  • Broke the uptrend line from low at 2:00 PM on Dec 30
30-Minute (e-mini future)
  • Emerging triangles dissolved
  • Below a downtrend line from the high at 9:00 AM on Jan 13
  • Bouncing off 61.8% Fib retracement of the rise from Jan 12 low of 2248.50 to Jan 13 high of 2273.50
  • Below falling 50-bar EMA and 20-day EMA, which are acting as resistance since Jan 16

Previous Session

U.S. indices were mostly up on Friday Jan 13, 2017. Only Dow Jones Industrial Average closed down. S&P 500 traded in a narrow range.

The chart pattern did not change much. S&P 500, NYSE Composite and Wilshire 5000 Total Market index are in a broadening pattern. DJIA and Russell 2000 are in a horizontal trading range. NASDAQ Composite continued it upward move and Dow Jones Transportation Average followed through on it break above a downtrend line.

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