Morning Notes – Monday July 31, 2017

/ July 31, 2017

Directional Bias For The Day:

  • S&P Futures are higher
  • Moving up sharply at European open
  • Odds are for an up day – watch for break below 2470.75 for a change of fortunes
  • Key economic data due:
    • Chicago PMI (est. 60.8) at 9:45 AM
    • Pending Home Sales (est. 0.9%) at 10:00 AM

Markets Around The World

  • Markets in the East closed mostly higher – Tokyo was higher
  • European markets are mostly higher – France is down
  • Dollar index is up; USD/JPY, GBP/USD and EUR/USD are lower
  • Commodities are mixed – crude oil and NatGas are lower; gold, silver and copper are higher
  • 10-yrs yield is at 2.298%, up from July 28 close of 2.289%; 30-years is at 2.910% up from 2.892%

Key Levels:

  • Critical support levels for S&P 500 are 2464.66, 2459.93 and 2455.02
  • Critical resistance levels for S&P 500 are 2475.38, 2481.96 and 2486.33
  • Key levels for eMini futures: break above 2474.75, the high of 3:00 AM and break below 2470.75, the low of 5:00 AM

Pre-Open

  • On Friday, at 4:00 PM, S&P future (September contract) closed at 2469.00 and the index closed at 2472.10 – a spread of about 3.00 points; futures closed at 2470.25 for the day; the fair value is -1.25
  • Pre-NYSE session open, futures price action is to the upside – at 8:30 AM, S&P 500 futures were up by +4.50; Dow by +64.00; and NASDAQ by +17.75

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:
  • A doji candle near the middle of the range for the last week, Friday July 28; made all time highs during the week
  • Last week’s pivot point 2472.02; R1=2484.12, R2=2496.13; S1=2460.01, S2=2447.91
  • A down week – first after three up weeks and second in last five weeks; third 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
  • An on-neck pattern following a bearish engulfing candle; a break below Friday’s low will be bearish
  • Last pattern was down-sloping flag in June, which was broken to the upside o July 13; the first target (100%) extension is near 2507.00; pattern before that was a horizontal channel, resulting in upside break, with a 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 rising up in stair shape after bouncing off the support made by the highs made on July 14 and above the sharp decline of 12:00 Noon candle on July 27; higher highs and higher lows since 6:00 AM on July 28
  • 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
  • Above 20-bar EMA, which is at 50-bar EMA
30-Minute (e-mini future)
  • Broke above an uneven horizontal channel at 2:30 PM on July 28 and, after a test of the upper limit, again at 2:00 AM on July 31; the 100% extension target is near 2473.00 and 161.8% is near 2476.50
  • Above up-sloping 20-bar EMA, which is above 50-bar EMA

Previous Session

Major U.S. indices closed mostly down on Friday, July 28. Dow Jones Industrial Average and Dow Joes Transportation Average closed up. However, the indices bottomed for the day in the early session trading. NASDAQ Composite made low in the first half hour and S&P 500 made it by 11:00 AM.

For the week, DJIA was higher and closed near the highs. S&P 500 and NASDAQ made near doji candles in the middle of the range. Russell 2000 declined and made an inverted hammer pattern.

Only two S&P 500 sectors – Industrial and Healthcare – were up on Friday. Real Estate was unchanged.

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