Morning Notes – Friday July 28, 2017

/ July 28, 2017

Directional Bias For The Day:

  • S&P Futures are lower
  • Moving up since 6:30 AM
  • Near resistance near 2467.25
  • Odds are for a down day – watch for break above 2467.25 for a change of fortunes
  • Key economic data due:
    • Advanced GDP (est. 2.5%), Advance GDP Price Index (est. 1.3%) at 8:30 AM
    • Employment Cost Index (est. 0.6%) at 8:30 AM
    • Revised UoM Consumer Sentiment (est. 93.2) at 10:00 AM

Markets Around The World

  • Markets in the East closed mostly lower – Shanghai was higher
  • European markets are mostly down – Switzerland is up
  • Dollar index and USD/JPY are lower; GBP/USD and EUR/USD are higher
  • Commodities are mixed – crude oil and silver are higher; NatGas, gold and copper are lower
  • 10-yrs yield closed at 2.310% on July 27, up from July 26 close of 2.282%; 30-years closed at 2.981% up from 2.891%

Key Levels:

  • Critical support levels for S&P 500 are 2459.93, 2455.02 and 2450.34
  • Critical resistance levels for S&P 500 are 2481.96, 2486.33 and 2497.24
  • Key levels for eMini futures: break above 2467.25, the high of 3:30 AM and break below 2461.50, the low of 6:00 AM

Pre-Open

  • On Thursday, at 4:00 PM, S&P future (September contract) closed at 2472.50 and the index closed at 2475.42 – a spread of about 3.00 points; futures closed at 2472.00 for the day; the fair value is +0.50
  • Pre-NYSE session open, futures price action is to the downside – at 8:00 AM, S&P 500 futures were down by -6.75; Dow by -33.00; and NASDAQ by -37.25

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:
  • Spinning top candlestick for the last week, Friday July 21, with small upper and lower shadows and above previous week’s candle
  • Last week’s pivot point 2466.83; R1=2483.33, R2=2494.11; S1=2456.05, S2=2439.55
  • An up week – third in a row and 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 bearish engulfing candle with longer lower shadow; closed in the upper half of the day’s range; filled the gap created on Tuesday
  • Last pattern was 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, 50-day EMA, 100-day and 200-day
  • Confirmed Uptrend
2-Hour (e-mini future)
  • Futures could not overcome the resistance of 2480.00 at 12:00 PM and fell sharply to the support near 2455.00, which was previous high on July 14
  • The break above a down-sloping flag appears to be nullified after reaching 61.8% extension of the move before the flag
  • Sequence of higher highs and higher lows, since 12:00 PM on June 29, is in danger of breaking; a break below 2457.00 will do it
  • Below recently falling 20-bar EMA, which is below 50-bar EMA
30-Minute (e-mini future)
  • Broke below a broadening pattern that was forming July 25; a continuation of break down will make it a topping pattern morning
  • The bounce from the sharp fall mid-day on July 27 was stopped at 61.8% retracement by session close; futures moved down for most of the overnight session; moving up since 6:30 AM; resistance near 2467.25
  • At down-sloping 20-bar EMA, which is below 50-bar EMA

Previous Session

Most major U.S. indices closed down on Thursday, July 27. Dow Jones Industrial Average made another high ha d along with Wilshire 5000 Total Market Index closed higher. NASDAQ Composite and S&P 500 made bearish engulfing candles. S&P 500 had longer lower shadow and closed in the upper half of day’s range. Russell 2000 and Dow Jones Transportation Average made large red candles. It seems less likely that DJIA will assert leadership with this type of price action.

Four S&P 500 sectors, mostly defensive, were up – Consumer Staples, Utility, Consumer Discretionary and Energy.

 

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