Morning Notes – Monday February 6, 2017

/ February 7, 2017

Directional Bias For The Day:

  • The futures are lower
  • In a horizontal channel since 9:30 AM on February 3
  • Knocking on the lower limit of the channel
  • Odds are for a down to sideways day; watch for break above 2294.25 for change of fortunes

Markets Around The World

  • Markets in the East were mostly higher; Sydney was the lone exception
  • European markets are lower
  • Dollar index and EUR/USD are up; GBP/USD and USD/JPY are down
  • Commodities are mixed – crude oil, NatGas are down; gold, silver and copper are up
  • 10-yrs yield is at 2.424%, down from February 3 close of of 2.491%; 30-years is at 3.060%, down from February 3 close of 3.114%

Key Levels:

  • Critical support levels for S&P 500 are 2287.88, 2275.14 and 2271.65
  • Critical resistance levels for S&P 500 are 2300.99, 2304.97 and 2311.62
  • Key levels for eMini futures: break above 2294.25, high of 5:30 AM and break below 2284.00, the low of 8:30 AM

Pre-Open

  • Pre-NYSE session open, futures price action is to the downside – at 9:00 AM, S&P 500 futures were down by -3.75, Dow is down by -36.00 and NASDAQ by -9.75
  • On Friday, at 4:00 PM, S&P future (March contract) closed at 2292.00 and the index closed at 2297.42 – a spread of about 5.50 points; futures closed at 2291.00 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, January 30, was a green candle following a large green body, which followed two weeks of near dojis bodies with small range within the large green body of January 2 week
  • Broke above a down-sloping flag on November 14, 2016; first target of 2285.92 is met; next target is near 2363.14
  • Last swing low, 2083.79, was the low on November 4, 2016
  • Above 39-week SMA and 89-week SMA
Daily
  • Closed the gap down open of Monday January 30 with a gap-up open, which completed the island chart pattern
  • The emerging broadening pattern since December 12, is getting nullified, a break below 2233.62 will resuscitate it
  • 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 a symmetrical triangle; now fallen back to the upper limit line
  • Trending higher since 10:00 AM on January 31 but not crossed above the high of 2299.50 made at midnight January 25-26;
  • Broken above the downtrend line from January 6 high, that it was hugging for many days
  • Uptrend paused
30-Minute (e-mini future)
  • Fallen back at the upper limit of a horizontal channel that it broke above on February 3; the target is near 2307.00
  • Made a near-triple bottom at 1:30 AM on February 2
  • At a rising 50-bar EMA and above 20-day EMA

Previous Session

U.S. indices were higher on Friday February 3 after a gap-up open. I the price continues moving up then it will form an island, which would be positive for the market. NYSE Composite and Wilshire 5000 Total Market Index are forming patterns similar to that of S&P 500.

Dow Jones Industrial average is knocking on the upper limit of a horizontal channel. A break above it will open the path towards 20250-20300 level. Dow Jones Transportation Average is trying to bounce from the near the 2017 lows.

Russell 2000 has moved to the middle of its horizontal channel and NASDAQ Composite is trying to break above its highs.

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