Morning Notes – Wednesday May 3, 2017

/ May 3, 2017

Directional Bias For The Day:

  • Futures are lower
  • Drifting lower since 2:00 PM on May 1; below a downtrend line
  • Trading near the lower limit of a descending triangle on 30-min time frame
  • Odds are for a down day within a range; watch for break above 2388.75
  • Key economic data:
    • ADP Non-Farm Employment – 177K vs. 178K est. – at 8:30 AM
    • ISM Non-Manufacturing PMI at 10:00 AM
    • FOMC Statement and Fed Funds Rate – at 2:00 PM

Markets Around The World

  • Markets in the East closed lower – Hong Kong, Tokyo and Seoul were closed
  • European markets are mixed – Germany, U.K., France, Italy and STOXX 600 are lower Spain and Switzerland are higher
  • Dollar index and USD/JPY are higher; GBP/USD and EUR/USD are lower
  • Commodities are mixed – crude oil and NatGas are higher; gold silver and copper are down
  • 10-yrs yield is at 2.291% down from May 2 close of 2.296%; 30-years is at 2.962% down from 2.982%

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 2387.25, the high of 4:00 PM on May 2, and break below 2381.00, the low of 6:00 AM

Pre-Open

  • Pre-NYSE session open, futures price action is to the down side – at 8:30 AM, S&P 500 futures were down by -3.50; Dow down by -16.00; and NASDAQ down by -12.00
  • On Tuesday, at 4:00 PM, S&P future (June contract) closed at 2386.75 and the index closed at 2391.17 – a spread of about 4.50 points; futures closed at 2385.75 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, 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 doji candle just above the real body of Monday; break below 2382.36 is still 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)
  • Drifting down since 2:00 PM on May 1
  • 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
  • At flat 50-bar EMA; below flat 20-bar EMA
30-Minute (e-mini future)
  • Downtrend since 2:00 PM on May 1
  • 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
  • Below drooping 50-bar EMA; at drooping 20-bar EMA

Previous Session

Major U.S. indices closed mostly higher on Tuesday May 2. Russell 2000 was an exception. Most indices made a doji or near-doji pattern, Dow Jones Transportation Average and Russell 2000 did not.

Price pattern for most indices was indecisive and their chart patterns, for most, did not change materially from Monday. Russell 2000 made a bearish engulfing and DJT opened in the muddle of Monday’s body but closed higher. 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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