Morning Notes – Monday August 7, 2017

/ August 7, 2017

Directional Bias For The Day:

  • S&P Futures are higher
  • Moving down from 2477.50, high at 9:00 PM on August 6
  • Odds are for a sideways to an up day – watch for break below 2472.75 for a change of fortunes
  • No Key economic data due:

Markets Around The World

  • Markets in the East closed mostly higher – Mumbai was down
  • European markets are mixed – Germany, France, Switzerland and STOXX 600 are down; U.K. Italy and Spain are up
  • Dollar index and GBP/USD are down;  USD/JPY and EUR/USD are up
  • Commodities are mixed – crude oil, gold and silver are down; NatGas and copper are up
  • 10-yrs yield is at 2.271% up from August 4 close of 2.267%; 30-years is at 2.847% up from 2.844%

Key Levels:

  • Critical support levels for S&P 500 are 2468.85, 2459.93 and 2450.34
  • Critical resistance levels for S&P 500 are 2480.38, 2484.04 and 2488.45
  • Key levels for eMini futures: break above 2477.25, the high of 3:30 AM and break below 2472.75, the low of 7:00 PM on August 6

Pre-Open

  • On Friday, at 4:00 PM, S&P future (September contract) closed at 2473.75 and the index closed at 2476.83 – a spread of about 3.00 points; futures closed at 2472.00 for the day; the fair value is +0.75
  • Pre-NYSE session open, futures price action is to the upside – at 9:00 AM, S&P 500 futures were up by +2.00; Dow by +24.00; and NASDAQ by +8.50

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:
  • Another doji candle with small upper and lower shadows within previous week’s candle for the week ending on Friday August 4
  • Last week’s pivot point 2474.56; R1=2482.65, R2=2488.46; S1=2468.75, S2=2460.66
  • An up week – 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 doji candle, which completely stayed
  • 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)
  • Break above a symmetrical triangle is faltering and the price is at the upper bound;
  • Higher highs and higher lows since 6:00 AM on July 28
  • At 20-bar EMA, which is above 50-bar EMA
30-Minute (e-mini future)
  • Made double (triple) top near 2477.25; above an uptrend line, which is resulting in an emerging ascending triangle
  • At/below 20-bar EMA and 50-bar EMA

Previous Session

Major U.S. indices closed higher on Friday, August 4. The day’s range was narrow for most. Indices made differing candlestick/chart patterns.

Dow Jones Industrial Average made another all time high, with a hammer candle. Dow Jones Transportation Average made a large green candle and is bouncing off 50-day EMA three days ago. Russell 2000 made a near bullish engulfing candle. NYSE Composite made a 3-day morning star pattern (without the preceding decline). Wilshire 500 Total Market Index is forming a down-sloping flag since July 25 high.

For the week the indices closed mixed. DJIA closed at the high of a positive week. DJT closed as a doji hammer candle. NASDAQ Composite is forming a 3-week evening star patter but needs a close below 6291.07, the low of week of July 17, for that to happen. S&P 500, NYSE and Wilshire made doji candles. Russell 200 made a large red candle.

Only three S&P 500 sectors – Consumer Staples, Utility and Healthcare – were down on Friday.

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