Morning Notes – Wednesday May 31, 2017

/ May 31, 2017

Directional Bias For The Day:

  • Futures are higher
  • Moving sideways since 11:30 AM on May 30 – high 2414.50, low 2410.00
  • Odds are for a sideways to an up day; watch for break below 2407.75 for change of fortunes
  • Key economic data:
    • Chicago PMI (est. 57.0) at 9:45 AM
    • Pending Home Sales (est. 0.7%) at 10:00 AM

Markets Around The World

  • Markets in the East were mixed – Shanghai, Sydney and Seoul were higher; Hong Kong, Tokyo and Mumbai were down
  • European markets are higher
  • Dollar index, GBP/USD and USD/JPY are down; EUR/USD is higher
  • Commodities are mixed – crude oil, silver and copper are down; NatGas and gold are higher
  • 10-yrs yield closed at 2.217% on May 30 down from May 26 close of 2.250%; 30-years closed at 2.886% down from 2.916%

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 2418.71, 2421.08 and 2427.38
  • Key levels for eMini futures: break above 2416.75, the high of 8:30 AM on May 29 and break below 2407.75, the low of 7:30 AM on May 30

Pre-Open

  • Pre-NYSE session open, futures price action is to the upside – at 7:15 AM, S&P 500 futures were up by +3.25; Dow by +24.00; and NASDAQ by +10.75
  • On Tuesday, at 4:00 PM, S&P future (June contract) closed at 2412.50 and the index closed at 2412.91 – a spread of about 0.50 points; futures closed at 2410.75 for the day; the fair value is +1.75

Directional Bias Before Open

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

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 26 was a large green candle with almost no lower shadow and very small upper shadow
  • Last week’s pivot point 2407.15; R1=2427.38, R2=2438.94; S1=2395.59, S2=2375.36
  • An up week – third 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
  • A small doji candle with almost no upper and lower shadows
  • 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)
  • In a narrow range since 10:00 PM on May 24
  • Making a slight round top pattern since 8:00 AM on May 26
  • Higher highs and higher lows since 4:00 AM on May 18;
  • At flat 20-bar EMA; at-to-above 50-bar EMA
30-Minute (e-mini future)
  • At the middle of a descending triangle / horizontal channel
  • Moving sideways since 12:00 PM on May 30
  • Up trend since 5:30 AM on May 18 – higher highs and higher lows – about to make first lower low
  • At-to-above flat 50-bar EMA and 20-bar EMA

Previous Session

Major U.S. indices closed down on Tuesday May 30 after Memorial Day.

S&P 500, NASDAQ Composite, Dow Jones Industrial Average and Wilshire 5000 Total Market Index and NUSE Composite made doji candle with small upper and lower shadows. closed higher. Dow Jones Transportation Average made a doji candle with larger upper and lower shadows. Russell 2000 made a large red candle.

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