Morning Notes – Thursday April 27, 2017

/ April 27, 2017

Directional Bias For The Day:

  • Futures are higher
  • Breaking above a narrow horizontal channel – high 2384.75, low 2381.25 – at 7:00 AM; the 100% extension target is 2388.25
  • Break below 2381.25 by futures and below 2386.76 by cash index will be short term bearish
  • Odds are for a down day to range bound; watch for break above 2390.25 for change of fortunes
  • Key economic data:
    • BoJ Police Rate (overnight – unchanged);
    • ECB minimum bud rate (no change) and press conference at 8:30 AM;
    • Core Durable Goods (-0.2% vs 0.4% est); durable goods (0.7% vs. 1.5% est) at 8:30 AM
    • Unemployment claims (257K vs. 241K est.) at 8:30 AM
    • Pending home sales (est. -0.6%) at 10:00 AM

Markets Around The World

  • Markets in the East closed mixed – Tokyo and Mumbai closed lower; Shanghai, Hong Kong, Sydney and Seoul closed higher
  • European markets are lower
  • Dollar index, GBP/USD and USD/JPY are higher; EUR/USD is lower
  • Commodities are mixed: crude oil, silver and copper are down; NatGas and gold are higher
  • 10-yrs yield closed at 2.311% on April 26 down from April 25 close of 2.327%; 30-years closed at 2.971% down from 2.979%

Key Levels:

  • Critical support levels for S&P 500 are 2381.15, 2376.17 and 2369.19
  • Critical resistance levels for S&P 500 are 2398.16, 2400.98 and 2406.22
  • Key levels for eMini futures: break above 2386.50, the high of 7:00 AM, and break below 2381.25, the low of 4:00 AM

Pre-Open

  • Pre-NYSE session open, futures price action is to the upside – at 8:15 AM, S&P 500 futures were up by +3.25, Dow by +28.00 and NASDAQ  by +10.75
  • On Wednesday, at 4:00 PM, S&P future (June contract) closed at 2383.50 and the index closed at 2387.45 – a spread of about 4.00 points; futures closed at 2382.25 for the day; the fair value is +1.25

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, Friday April 21, was a  small green candle, a harami with open and close within the body of previous large red candle
  • An up week – second in in last five weeks; sixth in last ten weeks
  • Forming a small down-sloping flag; break above 2378.36 will be bullish
  • Broke above a down-sloping flag on November 14, 2016; first target of 2285.92 and second target of 2363.14 are achieved
  • Last swing low, 2083.79, was the low on November 4, 2016
  • Above 39-week SMA and 89-week SMA
  • Confirmed uptrend, though pulling back
Daily
  • A near gravestone doji; index lost its early session gains and some more in the second half of the trading day; break below 2386.76 will be short term bearish
  • Broke above a down sloping flag on April 24; broke above 2378.36, which is bullish; found resistance at flag-pole high of 2400.98; the target will be near 2650
  • Uptrend under pressure; break above April 5 high of 2378.36 is critical for uptrend
  • Move above an up-sloping channel since December 27 still relevant
  • Above 100-day, 200-day, 50-day SMA/EMA and 20-day EMA
  • Last swing low 2263.62
  • Uptrend under pressure
2-Hour (e-mini future)
  • Within a narrow range since 10:00 AM on April 25 – high 2389.25 and low 2382.25; a break above this high was brief and the price has come back within the range
  • The horizontal channel break target, near 2385.00, was achieved
  • Uptrend since 8:00 PM on April 16; higher highs and higher lows
  • Within a range since March 21 – high 2378.75 and the low of 2327.25
  • Above rising 50-bar EMA; at flat 20-bar EMA
30-Minute (e-mini future)
  • Within a narrow range since 4:P0 AM on April 26 – high 2386.50 and low 2381.25
  • Forming an uneven head and shoulder pattern break below 2381.25 will open the path to 2368.00 level; the support is at 2365.75
  • Achieved the target of the broken ascending triangle at 6:00 PM on Sunday April 23; triangle height is 33.75 points and the break out point is 2356.50, giving a 100% extension target near 2390.00
  • Above rising 50-bar EMA; at 20-bar EMA

Previous Session

Major U.S. indices closed mostly lower on Wednesday April 26. They were higher till 11:30 AM and then then declined, which picked up sped during the final half hour of the trading. Russell 2000 was an exception and it closed higher for the day.

S&P 500, Dow Jones Industrial Average and NASDAQ Composite made near shooting star or gravestone doji. A break below the lows of Wednesday will be short bearish.

Dow Jones Transportation Average had made a gravestone doji pattern on Tuesday and on Wednesday it followed through to the downside.

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