Morning Notes – Monday July 17, 2017

/ July 17, 2017

Directional Bias For The Day:

  • Futures are mixed to little changed
  • Drifting sideways since 2:30 PM on July 14
  • Odds are for a sideways to an up day; watch for break below 2452.75 for a change of fortunes;
  • Key economic data due:
    • Empire State Manufacturing Index (9.8 vs. 15.2 est.) at 8:30 AM

Markets Around The World

  • Markets in the East closed mixed – Shanghai and Sydney were down; Hong Kong, Mumbai and Seoul were up; Tokyo was closed
  • European markets are mostly higher – Germany and Spain are down
  • Dollar index is up; USD/JPY, GBP/USD and EUR/USD are down
  • Commodities are mostly higher – crude oil is down
  • 10-yrs yield closed at 2.319% on July 14, down from July 13 close of 2.348%; 30-years closed at 2.910% down from 2.923%

Key Levels:

  • Critical support levels for S&P 500 are 2446.69, 2441.69 and 2435.75
  • Critical resistance levels for S&P 500 are 2466.31, 2473.35 and 2483.16
  • Key levels for eMini futures: break above 2461.25, the high of 3:30 PM on July 14 and break below 2454.00, the low of 5:00 AM

Pre-Open

  • On Friday, at 4:00 PM, S&P future (September contract) closed at 2456.25 and the index closed at 2459.27 – a spread of about 3.00 points; futures closed at 2456.00 for the day; the fair value is +0.25
  • Pre-NYSE session open, futures price action is almost unchanged – at 9:00 AM, S&P 500 futures were down by -0.50; Dow down by -1.00; and NASDAQ up by +1.25

Directional Bias Before Open

  • Weekly: Up
  • Daily: Up
  • 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 July 14 was bullish engulfing pattern; breaking out to the upside
  • Last week’s pivot point 2445.20; R1=2477.61, R2=2495.95; S1=2426.86, S2=2394.45
  • An up week – second in a row and fourth in last five weeks; sixth 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 green candle that gapped up at the open mostly stayed above the gap
  • Breaking to the upside from down sloping flag on daily timeframe since June 5 with high point made on June 19; breaking above the flag pole
  • 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
  • Above 20-day EMA; above 50-day EMA; above 100-day and 200-day
  • Uptrend resumed
2-Hour (e-mini future)
  • Broken above horizontal channels and descending triangle – a trading area since May 24;
  • Sequence of higher highs and higher lows since 12:00 PM on June 29;
  • Above rising 20-bar EMA, which is above a rising 50-bar EMA
30-Minute (e-mini future)
  • Drifting side ways since 1:30 PM on July 14
  • Sequence of higher highs and higher lows since 11:00 AM on July 11
  • Above 20-bar EMA, which is above 50-bar EMA

Previous Session

Most major U.S. indices closed higher on Friday. Most made all time closing and intra-day highs. Russell 2000 did not make intra-day high but closed at all time high. NASDAQ Composite did not make either types of highs. On weekly time-frame major indices made bullish engulfing candle pattern. The upside break seems to have more legs to run to the upside.

Only one  S&P 500 sectors was down – Finance. The best performing sectors were – Real Estate (+1.0%), Technology (+0.9%) and Consumer Staples (+0.8%).

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