Morning Notes – Friday May 26, 2017

/ May 26, 2017

Directional Bias For The Day:

  • Futures are lower
  • Drifting lower since 3:30 PM on May 25
  • Trading within a range since 9:00 PM on May 24 – high of 2417.75 and low of 2405.50
  • Odds are for a sideways to a down day; watch for break above 2417.75 for change of fortunes
  • Key economic data:
    • Core Durable Goods Order – -0.4% vs. 0.4% est. – at 8:30 AM
    • Prelim GDP q/q – 1.2% vs. 0.9% – at 8:30 AM
    • Revised Univ. of Michigan Consumer Sentiment (est. 97.6) at 10:00 AM

Markets Around The World

  • Markets in the East were mixed – Shanghai, Hong Kong, Mumbai and Seoul were higher; Tokyo and Sydney were down
  • European markets are lower
  • Dollar index, EUR/USD, GBP/USD and USD/JPY are lower
  • Commodities are mixed – crude oil and copper are lower; NatGas, gold and silver are higher
  • 10-yrs yield closed at 2.255% on May 25 down from May 24 close of 2.266%; 30-years closed at 2.922% down from 2.935%

Key Levels:

  • Critical support levels for S&P 500 are 2408.01, 2397.99 and 2387.21
  • Critical resistance levels for S&P 500 are 2419.85, 2424.63 and 2430.55
  • Key levels for eMini futures: break above 2417.75, the high of 3:30 PM on May 25 and break below 2406.00, the low of 9:30 AM on May 25

Pre-Open

  • Pre-NYSE session open, futures price action is to the downside – at 8:30 AM, S&P 500 futures were down by -4.00; Dow by -31.00; and NASDAQ by -5.25
  • On Thursday, at 4:00 PM, S&P future (June contract) closed at 2413.75 and the index closed at 2415.07 – a spread of about 1.25 points; futures closed at 2413.50 for the day; the fair value is +0.25

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
  • Broke above a horizontal channel – high 2400.58 and low 2322.25 – 100% extension target near 2480.00
  • 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 resumed
2-Hour (e-mini future)
  • Drifting down since the high of 2417.75 at 2:00 PM on May 25
  • Higher highs and higher lows since 4:00 AM on May 18;
  • Filled the gap up open of April 23
  • Above rising 20-bar EMA and 50-bar EMA
30-Minute (e-mini future)
  • Drifting down in a narrow down-sloping channel since 3:30 PM on May 25
  • Up trend since 5:30 AM on May 18 – higher highs and higher lows
  • At or below flattening 50-bar EMA and 20-bar EMA

Previous Session

Major U.S. indices closed higher for the sixth day on Thursday May 25.

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

S&P 500 broke above a horizontal channel. Dow Jones Industrial Average is breaking above a cup-with-handle pattern on daily chart. NASDAQ Composite gapped up at the open. Dow Jones Transportation Average is trying to break above a down trend line from it all time high on March 1. Russell 2000 is also trying to break above a down trend line form its April 26 all time high.

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