Morning Notes – Wednesday August 9, 2017

/ August 9, 2017

Directional Bias For The Day:

  • S&P Futures are sharply lower
  • Moving down from 2488.50, high at 12:00 PM on August 8; fresh leg down from high of 2468.00 at 3:00 AM; forming a bearish ABCD pattern with target near 2440.00
  • Odds are for a down day – watch for break above 2468.00 for a change of fortunes
  • Key economic data due:
    • Prelim Non-Far, Productivity (est. 0.7%) at 8:30 AM
    • Prelim Unit Labor Costs (est. 1.1%) at 8:30 AM

Markets Around The World

  • Markets in the East closed mostly lower – Sydney was up
  • European markets are down
  • Dollar index, USD/JPY, GBP/USD and EUR/USD are down
  • Commodities are higher
  • 10-yrs yield closed at 2.283% on August 8 up from August 7 close of 2.257%; 30-years closed at 2.867% down from 2.837%

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 2483.14, 2490.87 and 2499.25
  • Key levels for eMini futures: break above 2468.00, the high of 3:00 AM and break below 2459.00, the low of 5:30 AM

Pre-Open

  • On Tuesday, at 4:00 PM, S&P future (September contract) closed at 2472.00 and the index closed at 2474.92 – a spread of about 3.00 points; futures closed at 2472.75 for the day; the fair value is -0.75
  • Pre-NYSE session open, futures price action is to the downside – at 7:45 AM, S&P 500 futures were down by -10.50; Dow by -49.00; and NASDAQ by -37.00

Directional Bias Before Open

  • Weekly: Up
  • Daily: Up
  • 120-Min: Side-to-Down
  • 30-Min: Side-to-Down

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 small bodied red candle with large upper shadow and small lower shadow; declined from all time high and lost ground; could turn out to be a reversal
  • 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)
  • Broke above a symmetrical triangle and reached 61.8% of the height before reversing; broke below the lower bound of the triangle
  • Near the support of 2457.00, the low on July 27, a significant support level
  • Higher highs and higher lows since 6:00 AM on July 28
  • Below 20-bar EMA, which is below 50-bar EMA
30-Minute (e-mini future)
  • Sharply lower from high of 2488.50 at 12:00 PM on August 8; lower lows and lower highs; brief bounce failed after an up-slopoing flag; target near 2440.00
  • Below 20-bar EMA and 50-bar EMA

Previous Session

Major U.S. indices closed lower on Tuesday, August 8. All gave up their mid day gains and the closed in the lower half of day’s range. S&P 500, Dow Jones Industrial Average, NYSE Composite and Wlishire 5000 Total Market Index made all time intra-day highs but closed down. Thsi will constitute a one-reversal but for it to have any teeth, the day’s low has to be taken out.

Only two S&P 500 sectors – Consumer Discretionary and Utility – were up on Tuesday.

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