Morning Notes – Thursday May 25, 2017

/ May 25, 2017

Directional Bias For The Day:

  • Futures are higher
  • Moving sideways since 9:30 PM on May 24
  • Odds are for a sideways to an up day; watch for break below 2403.25 for change of fortunes
  • Key economic data:
    • Unemployment Claims – 234K vs. 238K est. – at 8:30 AM

Markets Around The World

  • Markets in the East were higher
  • European markets are mixed – Germany, U.K., Italy and STOXX 600 are down; France and Spain are up; Switzerland is closed
  • Dollar index, EUR/USD and GBP/USD are lower; USD/JPY is higher
  • Commodities are mostly higher – crude oil is lower
  • 10-yrs yield is at 2.259% down from May 24 close of 2.266%; 30-years is at 2.928% down from 2.935%

Key Levels:

  • Critical support levels for S&P 500 are 2396.72, 2387.21 and 2379.56
  • Critical resistance levels for S&P 500 are 2407.32, 2410.24 and 2414.91
  • Key levels for eMini futures: break above 2412.50, the high of 2:00 AM and break below 2403.25, the low of 9:00 PM on May 24

Pre-Open

  • Pre-NYSE session open, futures price action is to the upside – at 9:00 AM, S&P 500 futures were up by +6.50; Dow by +71.00; and NASDAQ by +24.00
  • On Wednesday, at 4:00 PM, S&P future (June contract) closed at 2402.50 and the index closed at 2404.39 – a spread of about 2.00 points; futures closed at 2402.00 for the day; the fair value is +0.50

Directional Bias Before Open

  • Weekly: Up
  • Daily: Side
  • 120-Min: Up
  • 30-Min: Up

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 19, was a red candle with longer lower shadow than upper shadow
  • Last week’s pivot point 2382.38; R1=2412.03, R2=2435.43; S1=2358.98, S2=2329.33
  • A down week – second in last five weeks; fifth 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
  • Small range green candle at the upper limit of an elevated handle of cup-with-handle pattern
  • Formed a double top – March 1 high of 2400.98 and May 16 high of 2405.77; the intermediate low is 2322.25; a break below it will have a target near 2240.00 level
  • Falling back within the down sloping flag that it broke above on April 24; break below 2328.95 will nullify the pattern
  • Move above an up-sloping channel since December 27 still relevant
  • Above 20-day and 50-day EMA; above 100-day and 200-day
  • Last swing low 2263.62
  • Mostly sideways move since February 17 – high near 2400 and the lo near 2330
  • Uptrend under pressure; break above 2305 will resume it
2-Hour (e-mini future)
  • Up trend resumed after a short sideways move on May 23;
  • Higher highs and higher lows since 4:00 AM on May 18; downtrend since 8:00 AM on May 16 – lower highs, lower lows – may be in danger of reversing
  • Filled the gap up open of April 23
  • Above rising 20-bar EMA and 50-bar EMA
30-Minute (e-mini future)
  • Up trend resumed after a short sideways move on May 23
  • Up trend since 5:30 AM on May 18 – higher highs and higher lows
  • Above rising 50-bar EMA; at rising-to-flat 20-bar EMA

Previous Session

Major U.S. indices closed higher for the fifth day on Wednesday May 24.

S&P 500 and Wilshire 5000 Total Market Index made all time highs and closed at all time high levels.

Dow Jones Industrial Average is making a cup-with-handle pattern on daily chart. NASDAQ Composite is making a V-shape pattern following all time high on May 16.

Dow Jones Transportation Average is below a down trend line from it all time high on March 1, but it made TCLOS (Trend Channel Line Overshoot) pattern on May 18, which usually is bullish signal. Russell 2000 is bouncing near a support zone but is below a down trend line form its April 26 all time high.

 

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