Morning Notes – Monday January 23, 2017

/ January 23, 2017

Directional Bias For The Day:

  • The futures are lower
  • Trending down since 9:30 AM on Friday
  • Friday was narrow range day
  • Odds are for a down to sideways day; watch for break above 2267.00 for change of fortunes

Markets Around The World

  • Markets in the East were mixed: Tokyo and Sydney were down; Shanghai, Hong Kong, Mumbai and Seoul were up;
  • European markets are down
  • Dollar index and USD/JPY are down; GBP/USD and EUR/USD are up
  • Commodities are mostly up: only NatGas is down
  • 10-yrs yield is at 2.449% down from Jan 20 close of 2.467%; 30-years is at 3.032% down from 3.046% on Jan 20

Key Levels:

  • Critical support levels for S&P 500 are 2265.01, 2258.41 and 2254.25
  • Critical resistance levels for S&P 500 are 2274.23, 2278.68 and 2282.10
  • Key levels for eMini futures: break above 2263.75, high at 6:00 AM and break below 2258.00, the low of 3:00 AM

Pre-Open

  • Pre-NYSE session open, futures price action is to the downside – at 8:30 AM, S&P 500 futures were down by -4.50, Dow by -28.00 and NASDAQ by -11.00
  • On Friday, at 4:00 PM, S&P future (March contract) closed at 2266.25 and the index closed at 2271.31 – a spread of about 5.00 points; futures closed at 2266.00 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 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
  • Thursday, January 19, was a bearish engulfing pattern in the middle of the broadening pattern
  • Above 100-day, 200-day and 50-day; at 20-day SMA
  • Sequence of higher highs and higher lows
  • Last swing low 2263.62
2-Hour (e-mini future)
  • Downward pressure; hugging the downtrend line from January 6 high; 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; again broke above on Jan 20 but fell back in by the EOD
  • 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)
  • The emerging symmetrical triangle morphed into a horizontal channel with couple of spikes above and below
  • Broken above the downtrend line from the high at 9:00 AM on Jan 13
  • Touched the 78.6% Fib retracement of the rise from Jan 12 low of 2248.50 to Jan 13 high of 2273.50
  • Above slightly rising 50-bar EMA and 20-day EMA

Previous Session

U.S. indices were higher on Friday January 20. The daily range was narrow. The chart patterns also did not change materially. This was the sixth day in a row that the indices were in a narrow range and there wasn’t any change to the patterns.

DJIA is still near the lower limit of its narrow horizontal trading range and is at 20-day EMA. Russell 2000 is trying to get to its lower limit of a similar range and is below its 20-day EMA. S&P 500, NYSE Composite and Wilshire 5000 Total Market Index continue to be in the middle of their broadening pattern at the 20-0day EMA. NASDAQ Composite has moved sideways for four days.

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