Morning Notes – Wednesday August 2, 2017

/ August 2, 2017

Directional Bias For The Day:

  • S&P Futures are higher
  • Off the high of 2476.00 reached at 6:30 AM
  • At the uptrend line from July 27 lows
  • Odds are for sideways day – watch for break above 2476.00 or below 2471.25 for a change of fortunes
  • Key economic data due:
    • ADP Non-Farm Employment Change (est. 187K) at 8:15 AM

Markets Around The World

  • Markets in the East closed mixed – Shanghai, Sydney and Mumbai closed lower; Hong Kong, Tokyo and Seoul closed higher
  • European markets are mostly lower – Switzerland is higher
  • Dollar index is down; USD/JPY, GBP/USD and EUR/USD are up
  • Commodities are lower
  • 10-yrs yield closed at 2.251% on August 1 down from July 31 close of 2.292%; 30-years closed at 2.851% up from 2.898%

Key Levels:

  • Critical support levels for S&P 500 are 2471.14, 2468.53 and 2464.66
  • Critical resistance levels for S&P 500 are 2477.96, 2481.96 and 2484.04
  • Key levels for eMini futures: break above 2476.00, the high of 6:30 AM and break below 2471.25, the low of 4:00 PM on August 1

Pre-Open

  • On Tuesday, at 4:00 PM, S&P future (September contract) closed at 2473.00 and the index closed at 2476.35 – a spread of about 3.25 points; futures closed at 2472.25 for the day; the fair value is +0.75
  • Pre-NYSE session open, futures price action is to the upside – at 7:30 AM, S&P 500 futures were up by +0.25; Dow by +36.00; and NASDAQ by +39.75

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
  • A red doji candle with small lower shadow and smaller upper shadow
  • 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)
  • Continues past two days’ chart pattern – 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)
  • The up-sloping channel is morphing into a horizontal channel; broke above an uneven horizontal channel at 2:30 PM on July 28; 100% and 161.8% extension targets achieved
  • Below 50-bar EMA, which is below 20-bar EMA

Previous Session

Major U.S. indices closed mostly higher on Tuesday, August 1. Dow Jones Transportation Average closed down. Dow Jones Industrial Average made another high. NASDAQ Composite made a harami pattern within a bearish engulfing pattern.

Four S&P 500 sectors – Consumer Staples, Energy, Industrial and Healthcare – were down on Tuesday.

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