Morning Notes – Monday May 8, 2017

/ May 8, 2017

Directional Bias For The Day:

  • Futures are lower
  • Jumped up six points following French election at 6:00 PM on Sunday but are now lower
  • Trading within a narrow horizontal channel since 7:00 PM on Sunday
  • Competing forces are working for up and down move; for clarity watch for break below above 2397.25 and below 2392.25
  • No significant economic data on schedule

Markets Around The World

  • Markets in the East were mostly higher – Shanghai was down
  • European markets are mostly lower – U.K. is higher
  • Dollar index is up; GBP/USD, USD/JPY and EUR/USD are down
  • Commodities are mixed- crude oil, NatGas and copper are lower; gold and silver are higher
  • 10-yrs yield closed at 2.352% on May 5 down from May 4 close of 2.356%; 30-years closed at 2.989% down from 2.999%

Key Levels:

  • Critical support levels for S&P 500 are 2389.38, 2380.35 and 2376.98
  • Critical resistance levels for S&P 500 are 2402.59, 2405.90 and 2412.50
  • Key levels for eMini futures: break above 2397.50, the high of 1:30 AM, and break below 2391.50, the high of 9:30 AM on May 5

Pre-Open

  • Pre-NYSE session open, futures price action is to the downside- at 9:00 AM, S&P 500 futures were down by -3.50; Dow down by -37.00; and NASDAQ by -5.75
  • On Friday, at 4:00 PM, S&P future (June contract) closed at 2395.75 and the index closed at 2399.29 – a spread of about 3.50 points; futures closed at 2397.75 for the day; the fair value is -2.00

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 May 5, was a  green candle, with no upper shadow; previous week’s chart pattern continue
  • An up week – third in a row and 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 green candle with no upper shadow and very small lower shadow
  • Breaking above a small flag with target near 2450.00
  • 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 2650.00
  • 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)
  • Broke above a narrow horizontal channel – emerging since the 8:00 AM on April 25 (high 2390.75, low 2376.00) with up target near 2404.75; achieved the target at the week’s open and has since declined to just above the upper limit of the channel
  • Pause in the uptrend since 8:00 PM on April 16 maybe broken; higher highs and higher lows; mostly moving sideways since April 25
  • Above rising 50-bar EMA and 20-bar EMA
30-Minute (e-mini future)
  • Uptrend since 12:00 PM on May 4 – higher highs and higher lows;
  • Reached 2403.75, just near he target of a broken channel at 6:00 PM on Sunday; retreating since
  • Just above rising 50-bar EMA but at or below a flat 20-bar EMA

Previous Session

Major U.S. indices closed higher on Friday May 5, following a non-Farm Payroll report that was better than expected. The markets had been moving up since midnight and they continued that move during the day, even accelerating near the close.

Most indices opened near the low for the day and closed near day’s high. NASDAQ Composite made a near hammer pattern. Major indices are also breaking above a small flag that had been forming on intra-charts since April 25. NASDAQ Composite is making a round cup pattern since May 2. For S&P 500, a break above 2400 has potential target of the flag is near 2450.00 For DJIA the corresponding break point is 21070 and the target is near 21500. The levels of r Russell 200 are break above 1425 and the target is near 1460.00

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