Morning Notes – Tuesday May 2, 2017

/ May 2, 2017

Directional Bias For The Day:

  • Futures are flat
  • Trading within a narrow range since 3:30 PM on May 1
  • Odds are for a range bound day; watch for break above 2390.25 and break below 2384.25 for change of fortunes
  • Key economic data:
    • Core PCE Price Index: -0.1% inline – at 8:30 AM
    • Personal Spending – 0.0% vs. 0.2% est. – at 8:30 AM
    • ISM Manufacturing at 10:00 AM

Markets Around The World

  • Markets in the East closed mostly higher – Shanghai and Sydney closed lower
  • European markets are higher
  • Dollar index, GBP/USD, USD/JPY and EUR/USD are higher
  • Commodities are mixed – crude oil, gold and copper are down; NatGas and silver are up
  • 10-yrs yield is at 2.327% up from May 1 close of 2.325%; 30-years is at 3.009% up from 3.011%

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 2393.68, 2398.16 and 2400.98
  • Key levels for eMini futures: break above 2390.25, the high of 3:30 PM on May 1, and break below 2384.25, the low of 2:00 AM

Pre-Open

  • Pre-NYSE session open, futures price action is almost unchanged – at 9:00 AM, S&P 500 futures were flat, Dow down by -7.00 and NASDAQ up by +7.50
  • On Monday, at 4:00 PM, S&P future (June contract) closed at 2385.50 and the index closed at 2388.33 – a spread of about 3.00 points; futures closed at 2387.00 for the day; the fair value is -1.50

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, Friday April 28, was a  green candle, with no lower shadow and a up gap from previous week;
  • An up week – third in in last five weeks; sixth in last ten weeks
  • Broke above a down sloping flag (2378.36), which has bullish implications;
  • 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 harami doji within the bearish engulfing candle of Friday; break below 2382.36 is critical
  • 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
  • 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;
  • Breaking above a descending triangle; hugging the upper limit since 8:00 AM on May 1; a break above 2388.50 is critical for up move; lower limit break is near 2377.00
  • Uptrend since 8:00 PM on April 16; higher highs and higher lows
  • Above rising 50-bar EMA; at flat 20-bar EMA
30-Minute (e-mini future)
  • Within a narrow range since 4:00 AM on April 26 – high 2386.50 and low 2381.25
  • The descending triangle on 2-hour time frame is more like a down sloping flag on 30-minute; a break above 2388.50 will complete the flag break
  • Drifting higher since 6:00 PM on Sunday April 30
  • Above flat 50-bar EMA; at 20-bar EMA

Previous Session

Major U.S. indices closed mixed on Monday May 1. S&P 500, NASDAQ Composite, Russell 2000 and Wilshire 5000 Total Market Index closed up. Dow Jones Industrial Average and Dow Jones Transportation Average closed down and NYSE Composite was almost unchanged.

Price pattern for most was also indecisive. NASDAQ made another high and in the process nullified previous day’s bearish formation. S&P 500, Russell 2000, NYSE Composite and Wilshire 5000 Total Market Index made harami patterns – either doji or spinning tops.

The levels that were critical on Monday remain so except for NASDAQ. The critical support for DJIA is 2909.38 and for S&P 500 it is 2381.15.

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