Morning Notes – Thursday August 3, 2017

/ August 3, 2017

Directional Bias For The Day:

  • S&P Futures are little changed to down
  • In the middle of a symmetric triangle on 30-min chart
  • Odds are for sideways to down day – watch for break above 2474.75 for a change of fortunes
  • Key economic data due:
    • BOE Bank Rate and Press Conference
    • Unemployment Claims (est. 242K) at 8:30 AM
    • ISM Non-Manufacturing PMI (est. 56.9) at 10:00 AM

Markets Around The World

  • Markets in the East closed down
  • European markets are mixed – Germany, Spain and STOXX 600 are down; U.K. France, Italy and Switzerland are higher
  • Dollar index is up; USD/JPY, GBP/USD and EUR/USD are down
  • Commodities are mixed – crude oil and NatGas are up; gold, silver and copper are down
  • 10-yrs yield closed at 2.262% on August 2 up from August 1 close of 2.251%; 30-years closed at 2.845% down from 2.851%

Key Levels:

  • Critical support levels for S&P 500 are 2466.48, 2459.93 and 2450.34
  • Critical resistance levels for S&P 500 are 2480.38, 2484.04 and 2488.71
  • Key levels for eMini futures: break above 2474.75, the high of 4:00 PM on August 2and break below 2467.75, the low of 3:30 AM

Pre-Open

  • On Wednesday, at 4:00 PM, S&P future (September contract) closed at 2474.00 and the index closed at 2477.57 – a spread of about 3.50 points; futures closed at 2473.50 for the day; the fair value is +0.50
  • Pre-NYSE session open, futures price action is little changed to down – at 7:45 AM, S&P 500 futures were down by +2.00; Dow down by -12.00; and NASDAQ up by +3.50

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:
  • 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 green dragonfly doji candle; break of either extremes will be significant
  • 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)
  • Broken with past few day’s chart pattern and futures have started to dip down; the high of 2477.25 at 4:00 AM on August 1 is turning out to be the turning point
  • Emerging symmetrical triangle since July 27; high 2480.50 and low 2457.00; higher highs and higher lows since 6:00 AM on July 28
  • At 20-bar EMA, which is at 50-bar EMA
30-Minute (e-mini future)
  • The up-sloping channel turned into sideways move with a downward bias
  • At 50-bar EMA, which is above 20-bar EMA

Previous Session

Major U.S. indices closed mixed on Wednesday, August 2. Dow Jones Industrial Average, S&P 500 and Dow Jones Transportation Average closed up. NASDAQ Composite, Russell 2000, NYSE Composite and Wilshire 5000 Total Market Index closed down.

DJIA made another high, formed a doji candle. S&P 500 made a dragonfly pattern, DJT made a harami candle. NASDAQ and Russell 2000 made a bearish engulfing candles. NYSE Composite made 3-day evening star pattern, a break below Wednesday’s low will be bearish.

Five S&P 500 sectors – Materials, Industrials, Finance, Technology and Utility – were up on Wednesday.

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