Morning Notes – Wednesday July 5, 2017

/ July 5, 2017

Directional Bias For The Day:

  • Futures are higher
  • Drifting sideways since 6:00 PM on July 3
  • Last fifteen minutes of sharp decline on Monday will impact early morning trading and will give clue for the rest of the day
  • Odds are for a sideways to an up day watch for break below 2422.50 for a change of fortunes
  • Key economic data due:
    • FOMC Meeting Minutes at 2:00 PM

Markets Around The World

  • Markets in the East closed mostly higher – Sydney was down
  • European markets are mixed – Germany, U.K., France and STOXX 600 are up; Spain, Italy and Switzerland are down
  • Dollar index and USD/JPY are up; GBP/USD and EUR/USD are down
  • Commodities are mixed – crude oil, silver and copper are down; gold and NatGas are up
  • 10-yrs yield closed at 2.346% on July 3, up from June 30 close of 2.302%; 30-years closed at 2.862% up from 2.840%

Key Levels:

  • Critical support levels for S&P 500 are 2423.57, 2405.70 and 2385.68
  • Critical resistance levels for S&P 500 are 2439.17, 2442.93 and 2450.42
  • Key levels for eMini futures: break above 2431.25, the high of 5:00 AM on July 4 and break below 2422.50, the low of 4:30 AM

Pre-Open

  • On Monday, July 3, at 1:00 PM, S&P future (September contract) closed at 2425.00 and the index closed at 2429.01 – a spread of about 4.00 points; futures closed at 2425.00 for the day; the fair value is 0.00
  • Pre-NYSE session open, futures price action is to the upside – at 8:15 AM, S&P 500 futures were up by +2.75; Dow by +6.00; and NASDAQ by +16.00

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 30 was a bearish engulfing candle with small upper shadow and a large lower
  • Last week’s pivot point 2426.51; R1=2447.32, R2=2471.23; S1=2402.60, S2=2381.79
  • A down week – second in last five weeks; fourth 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 small red doji candle with a larger upper shadow than lower shadow
  • 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)
  • Moving sideways since 6:00 PM on July 3 near 2428.00, which acted as a support from June 21 to June 27
  • Rising since 12:00 PM on June 29; near the middle of descending triangle which was briefly breached on June 29
  • Sequence of lower highs and lower lows since 2:00 PM on June 19
  • At flat 20-bar EMA and 50-bar EMA
30-Minute (e-mini future)
  • Mostly moving sideways since 2:30 PM on June 29 in a very narrow range; below the breakdown level of June 29
  • Rising from the lows of 2402.25 after making a triple top near 2445.00-2445.50;
  • Just above flat 20-bar EMA and 50-bar EMA

Previous Session

Major U.S. indices closed mostly higher on July 3. NASDAQ Composite was the only one to close down.

Just like on June 30, indices were up during the day but gave up most of their gains in the last fifteen minutes of trading.

Four S&P 500 sectors were down – Consumer Discretionary, Consumer Staples, Technology and Utility. The best sectors were Energy (+1.9%), Finance (+1.5%) and Materials (+0.9%).

 

 

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