Morning Notes – Monday February 27, 2017

/ February 27, 2017

Directional Bias For The Day:

  • The futures are drifting lower since 3:00 AM
  • Broke below the midpoint of a double top on 30-minute
  • Odds are for a down to sideways day; watch for break above 2370.00 for change of fortunes

Markets Around The World

  • Markets in the East closed down
  • European markets are mixed – Germany, U.K. and Italy are higher; France, Spain, Switzerland and STOXX 600 are lower
  • Dollar index and EUR/USD are lower; USD/JPY and GBP/USD are higher
  • Commodities are mixed – crude oil and NatGas are higher; gold and silver are down; copper is unchanged
  • 10-yrs yield is at 2.337% up from February 24 close of 2.317; 30-years is at 2.966%, up from February 24 close of 2.955%

Key Levels:

  • Critical support levels for S&P 500 are 2357.29, 2352.87 and 2338.87
  • Critical resistance levels for S&P 500 are 2368.26, 2372.16 and 2376.99
  • Key levels for eMini futures: break above 2370.00, high of 3:00 AM and break below 2362.50, the low of 6:00 PM on February 26

Pre-Open

  • Pre-NYSE session open, futures price action is to the downside – at 8:30 AM, S&P 500 futures were down by -0.75, Dow by -11.00 and NASDAQ by -9.00
  • On Friday, at 4:00 PM, S&P future (March contract) closed at 2365.25 and the index closed at 2367.34 – a spread of about 2.00 points; futures closed at 2365.00 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, Monday February 20, was a small green candle, that gapped up from previous week
  • Up for five 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 bullish engulfing candle that closed only slightly above Thursday’s open, which was higher than its close
  • Opened lower with a gap but turned around after first half hour and then gradually drifted higher; last half hour of the day’s session gained most
  • Intraday range less than 1.00% since December 29; since February 1 only three down days, all separate
  • 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)
  • Drifting lower after making a high of 2370..0 at 10:00 PM on February 26, during early Asian session
  • Up trend-channel line forming with three highs of February 21, 23 and 26
  • Early morning pattern similar to that of last few days with minor differences
  • Confirmed up-trend
  • Above a rising 20-bar EMA and 50-bar EMA
30-Minute (e-mini future)
  • A double top of 2370.00 formed by the high of 11:00 PM on February 26 and 3:00 AM; broke below the intermediate low of 235.50 at 4:30 AM; target 2361.50
  • Broadening top formation – three touches to upper limit and two touches to lower limit; a break below 2349.50 will confirm the topping pattern
  • Below drooping 20-bar EMA and flattening 50-bar EMA

Previous Session

U.S. indices closed mostly higher Friday February 24. Russell 2000 and NYSE Composite were the only ones to decline.

Dow Jones Industrial Average and S&P 500 made bullish engulfing candles that did not go much above previous day’s body. NASDAQ Composite and Dow Transportation Average closed within the previous day’s bod – near mid point. Russell 2000 made a small doji with very little upper shadow.

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