Morning Notes – Thursday July 6, 2017

/ July 6, 2017

Directional Bias For The Day:

  • Futures are lower
  • Drifting lower since 2:30 PM on July 5
  • Odds are for a down day; watch for break above 2420.25 for a change of fortunes
  • Key economic data due:
    • ADP Non-Farm Employment Change (158K vs. 184K est.) at 8:15 AM
    • Unemployment Claims (est. 243K) at 8:30 AM
    • ISM Non-Manufacturing PMI (est. 56.5) at 10:00 AM

Markets Around The World

  • Markets in the East closed mostly lower – Shanghai and Mumbai closed higher
  • European markets are lower
  • Dollar index is down; USD/JPY, GBP/USD and EUR/USD are up
  • Commodities are higher
  • 10-yrs yield closed at 2.334% on July 5, up from July 3 close of 2.346%; 30-years closed at 2.855% down from 2.862%

Key Levels:

  • Critical support levels for S&P 500 are 2422.05, 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 2420.00, the high of 5:30 AM and break below 2416.00, the low of 6:00 AM

Pre-Open

  • On Wednesday, at 4:00 PM, S&P future (September contract) closed at 2429.50 and the index closed at 2432.54 – a spread of about 3.00 points; futures closed at 2428.00 for the day; the fair value is +1.50
  • Pre-NYSE session open, futures price action is to the downside – at 8:00 AM, S&P 500 futures were down by -9.50; Dow by -77.00; and NASDAQ by -53.50

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 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 doji candle with a larger lower shadow than upper 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)
  • Breaking below support level near 2429.00; drifting sideways since 2:00 PM on July 5 from 2428.00, which acted as a support from June 21 to June 27
  • Sequence of lower highs and lower lows since 2:00 PM on June 19
  • Below recently falling 20-bar EMA, which is below falling 50-bar EMA
30-Minute (e-mini future)
  • Near the lower limit of a descending triangle; a break below 2428.50 will have a target near 2400.00
  • Drifting sideways with down bias since 10:00 AM on July 3 in a very narrow range;
  • Below falling 20-bar EMA, which is below falling 50-bar EMA

Previous Session

Major U.S. indices closed mixed on July 5. S&P 500, NASDAQ Composite, Dow Jones Transportation Average and Wilshire 5000 Total Market Index closed higher. Dow Jones Industrial Average, Russell 2000 and NYSE Composite closed lower. Most mode a doji or small body candlestick patterns.

Only four S&P 500 sectors were up – Industrial, Finance, Technology and Healthcare.

 

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