Morning Notes – Thursday January 26, 2017

/ January 26, 2017

Directional Bias For The Day:

  • The futures are moving sideways
  • Trending down after the high of 2299.50 at 1:00 AM
  • Wednesday was gap up open
  • Odds are for a sideways to down day; watch for break above 2299.50 for change of fortunes

Markets Around The World

  • Markets in the East were higher; Sydney and Mumbai were closed
  • European markets are higher
  • Dollar index and GBP/USD are up; EUR/USD and USD/JPY are down
  • Commodities are mixed: Crude oil and NatGas are up; gold, silver and copper are down
  • 10-yrs yield is at 2.525%, up from Jan 25 close of 2.523%; 30-years is at 3.103%, down from 3.108% on Jan 25

Key Levels:

  • Critical support levels for S&P 500 are 2288.88, 2284.83 and 2280.98
  • Critical resistance levels for S&P 500 are 2302.32, 2306.27 and 2312.99
  • Key levels for eMini futures: break above 2296.75, high of 6:00 AM and break below 2292.50, the low of 8:00 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 +0.50, Dow is by +23.00 and NASDAQ by +9.00
  • On Wednesday, at 4:00 PM, S&P future (March contract) closed at 2294.50 and the index closed at 2298.37 – a spread of about 4.00 points; futures closed at 2294.00 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 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
  • Gap up open following the largest daily range since January 3
  • At the upper limit of an emerging broadening pattern since December 12, which 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;
  • Drooping since making a high of 2299.50 at 1:00 AM on January 26
  • Sharp rise since 10:00 AM on January 23
  • Above rising 50-bar and 20-day EMAs
  • Uptrend resumed

Previous Session

U.S. indices gapped up at the open and were sharply higher on Wednesday January 25 following gains on previous day.

Dow Jones Industrial Average is breaking above its horizontal trading range with target near 20165. Dow Transportation Average is following through on its break of a down trend line and is now closer to all time high. Russell 2000 is also closer to the upper limit of its horizontal trading range. . NASDAQ Composite gapped up and made another new high. S&P 500 also gapped up is breaking above 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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