Morning Notes – Friday June 30, 2017

/ June 30, 2017

Directional Bias For The Day:

  • Futures are higher
  • Moving higher since 3:00 AM
  • Rising after a horizontal trading range; next resistance at 2428.00 and 2433.50
  • Odds are for a sideways to an up day watch for break below 2422.00 for a change of fortunes
  • Key economic data due:
    • Core PCE Price Index (est. 0.1%) at 8:30 AM
    • Personal Spending (est. 0.1%) at 8:30 AM
    • Chicago PMI (est. 58.1) at 9:45 AM
    • Revised UOM Consumer Sentiment (est. 94.5) at 10:00 AM

Markets Around The World

  • Markets in the East closed lower – Shanghai and Mumbai were up
  • European markets are higher
  • Dollar index is up; USD/JPY, GBP/USD and EUR/USD are down
  • Commodities are mixed – crude oil and copper are higher; NatGas, gold and silver are lower
  • 10-yrs yield closed at 2.267% on June 29 up from June 28 close of 2.221%; 30-years closed at 2.814% up from 2.774%

Key Levels:

  • Critical support levels for S&P 500 are 2405.70, 2385.68, and 2365.66
  • Critical resistance levels for S&P 500 are 2425.52, 2442.93 and 2450.42
  • Key levels for eMini futures: break above 2426.75, the high of 6:00 AM and break below 2415.00, the low of 3:00 AM

Pre-Open

  • On Thursday, at 4:00 PM, S&P future (September contract) closed at 2416.75 and the index closed at 2419.70 – a spread of about 3.00 points; futures closed at 2420.00 for the day; the fair value is -3.25
  • Pre-NYSE session open, futures price action is to the upside – at 7:30 AM, S&P 500 futures were up by +5.75; Dow by +46.00; and NASDAQ by +18.50

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 June 16 was an almost doji with small upper shadow and smaller lower shadow
  • Last week’s pivot point 2440.95; R1=2451.17, R2=2464.03; S1=2428.09, S2=2417.87
  • An up week – fourth in last five weeks; seventh in last ten weeks
  • Broke above a down sloping flag (2378.36) on April 24, which has bullish implications; first target is near 2520.00 and the second target is near 2640.00
  • Broke above a down-sloping flag on November 14, 2016; first target of 2285.92 is achieved; second target is near 2467.50
  • Last swing low, 2322.25, was the low on March 27, 2017
  • Above 39-week SMA, 89-week SMA and 10-week SMA
  • Confirmed uptrend, though pulling back
Daily
  • A large bearish engulfing candle with no upper shadow and lower shadow that was two third the size of real body;
  • Bouncing off the upper limit of a horizontal channel that it broke above in May – high 2400.58 and low 2322.25 – 100% extension target near 2480.00
  • Below 20-day but above 50-day EMA, 100-day and 200-day
  • Confirmed uptrend
2-Hour (e-mini future)
  • Bouncing off from just below May 31 low of 2402.75; near the previous support line at 2428.00, which may act as a resistance
  • Sequence of lower highs and lower lows since 2:00 PM on June 19
  • At falling 20-bar EMA, which is below falling 50-bar EMA
30-Minute (e-mini future)
  • Rising from the lows of 2402.25 after making a triple top near 2445.00-2445.50;
  • Above recently rising 20-bar EMA and above rising 50-bar EMA; 20-EMA is below 50-EMA

Previous Session

Major U.S. indices declined on Thursday June 29, giving up all the gains of Wednesday and then some.

Indices recovered part of their losses after making day’s low near 1:30 PM. Still, S&P 500, Dow Jones Industrial Average, NYSE Composite and Wilshire 5000 Total Market index made bearish engulfing. NASDAQ Composite opened below Wednesday’s open and stayed below it hence it avoided making bearish engulfing pattern. Russell 2000 and Dow Jones Transportation Average made better looking candlestick as both closed in the upper half of Wednesday’s real body.

 

. Most of them recovered the losses of Tuesday. NASDAQ Composite was the only exception. Indices gapped up at the open and most maintained that gap. NASDAQ was the only major index that tested Tuesday’s low. To get out of current short term trend, S&P 500 has to rise above 2450.42 to resume the uptrend.

Russell 2000 was the best performer with +1.5% gains followed by NASDAQ and Transports at 1.4%.

Only two S&P 500 sectors, Energy and Finance, were higher. The worst performers were Technology (-1.8%), Materials (-1.2%) and Staples (-1.1%).

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