Morning Notes – Thursday February 23, 2017

/ February 23, 2017

Directional Bias For The Day:

  • The futures are little changed
  • In the middle of a horizontal channel emerging since 9:30 AM on February 21
  • Odds are for a sideways day; watch for break above 2365.00 or below 2255.00 for change of fortunes

Markets Around The World

  • Markets in the East were mostly down – only Mumbai and Seoul closed higher
  • European markets are mixed – Germany, U.K. Italy and Switzerland are down; Spain and France are higher and STOXX 600 is unchanged
  • Dollar index, EUR/USD and GBP/USD are higher; USD/JPY is lower
  • Commodities are mostly higher – only copper is down
  • 10-yrs yield closed at 2.418% on February 22 down from February 21 close of 2.427%; 30-years closed unchanged at 3.037%

Key Levels:

  • Critical support levels for S&P 500 are 2358.18,  2351.30 and 2345.66
  • Critical resistance levels for S&P 500 are 2366.71, 2368.89 and 2372.64
  • Key levels for eMini futures: break above 2365.00, high of 3:30 PM on February 21 and break below 2355.25, the low of 6:30 AM on February 22

Pre-Open

  • Pre-NYSE session open, futures price action is little changed – at 7:00 AM, S&P 500 futures were up by +1.00, Dow  by +15.00 and NASDAQ by +3.00
  • On Wednesday, at 4:00 PM, S&P future (March contract) closed at 2360.50 and the index closed at 2362.82 – a spread of about 2.25 points; futures closed at 2361.00 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, Monday February 13, was a green candle, that gapped up from previous week
  • Up for four consecutive weeks
  • 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
  • A harami candle, which is doji too
  • Intraday range less than 1.00% since December 29
  • Drifting higher within an up-sloping channel since December 27
  • 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)
  • Within a narrow horizontal channel – high 2365.00, low 2355.25, which is also near the resistance made by the high of 2356.75 on February 20
  • Price mostly moving higher after making a low at 6:00 AM on February 22
  • Chart pattern similar to that of past few days – price makes a high during Asian session then drift lower before U.S. session open but not by much
  • Confirmed uptrend
  • At rising 20-bar EMA; above rising 50-bar EMA
30-Minute (e-mini future)
  • At the middle of a horizontal channel – high of 2364.75/2365.00 and low of 2355.75 = down break target near 2346.75 and up break target near 2373.75
  • Achieved the target of upside break of a descending triangle on February 21
  • Below drooping 20-bar EMA and flattening 50-bar EMAs

Previous Session

U.S. indices were mostly lower on Wednesday February 22. Dow Jones Industrial Average was the lone exception. Like other indices it opened within the body of Tuesday’s candle but closed above it.

S&P 500 and NASDAQ Composite are trading within a narrow range since 10:30 AM on February 21. The made a harami candle with open and close very close. NYSE Composite and Wilshire 5000 Total Market index also made similar candlestick pattern. Russell 2000 too made a harami candle but its body was bigger. Dow Transportation Average closed below Tuesday close. The overall price action indicates indecision with up bias.

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