Morning Notes – Wednesday January 25, 2017

/ January 25, 2017

Directional Bias For The Day:

  • The futures are higher
  • Trending higher 830 AM on Tuesday
  • Tuesday was LR7 (Large Range 7) day
  • Odds are for a sideways to up; watch for break below 2277.75 for change of fortunes

Markets Around The World

  • Markets in the East were higher
  • European markets are higher
  • Dollar index and USD/JPY are down; EUR/USD and GBP/USD are up
  • Commodities are mostly down: NatGas is the only exception
  • 10-yrs yield is at 2.491%, up from Jan 24 close of 2.471%; 30-years is at 3.073%, up from 3.056% on Jan 24

Key Levels:

  • Critical support levels for S&P 500 are 2269.62, 2257.02 and 2254.25
  • Critical resistance levels for S&P 500 are 2287.57, 2295.08 and 2305.52
  • Key levels for eMini futures: break above 2287.75 and break below 2279.50, the low of 5:00 AM

Pre-Open

  • Pre-NYSE session open, futures price action is to the upside – at 8:30 AM, S&P 500 futures were up by +9.50, Dow is by +100.00 and NASDAQ by +27.25
  • On Tuesday, at 4:00 PM, S&P future (March contract) closed at 2275.50 and the index closed at 2280.07 – a spread of about 4.50 points; futures closed at 2274.50 for the day; the fair value is -1.00

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
  • Largest daily range since January 3
  • Emerging broadening pattern since December 12 is in danger of being nullified
  • Above 100-day, 200-day, 50-day, and 20-day SMA/EMA
  • Sequence of higher highs and higher lows
  • Last swing low 2263.62
2-Hour (e-mini future)
  • Broken above the downtrend line from January 6 high, that it was hugging for many days
  • Sequence of lower high, lower lows since 12:00 PM on Jan 6, is broken with higher high and higher low
  • Uptrend resumption
  • At the upper limit of an emerging broadening pattern, that is danger of being nullified; it could also turn to be a TCLOS
30-Minute (e-mini future)
  • Broke above the horizontal channel, which formed from an emerging symmetrical triangle; 100% extension target of 2286.00 is almost achieved
  • Above rising 50-bar and 20-day EMAs
  • Uptrend resumed

Previous Session

U.S. indices were sharply higher on Tuesday January 24 after many days of narrow range days.

Dow Jones Industrial Average and Russell 2000 are moving toward the upper limit of their respective horizontal trading range. Dow Transportation Average is following through on its break of a down trend line and is now moving toward all time high. NASDAQ Composite has resumed its uptrend with a new high. S&P 500 also made a new high and is at the upper limit of its emerging broadening pattern, which is in danger of being nullified. All are above their respective 20-day EMA.

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