Morning Notes – Thursday August 10, 2017

/ August 10, 2017

Directional Bias For The Day:

  • S&P Futures are sharply lower
  • Moving down from 242474.50, high at 4:00 PM on August 9; second leg down from high of 2469.00 at 2:30 AM; forming a bearish ABCD pattern; 100% and 161.8% extension targets met
  • Odds are for a down day – watch for break above 2469.00 for a change of fortunes
  • Key economic data due:
    • PPI (-0.1% vs. 0.1% est.); Core PPI (-0.1% vs, 0.2% est.) at 8:30 AM
    • Unemployment Claims (244K vs. 240K est.) at 8:30 AM

Markets Around The World

  • Markets in the East closed lower
  • European markets are down
  • Dollar index is up; USD/JPY, GBP/USD and EUR/USD are down
  • Commodities are mostly higher – copper is down
  • 10-yrs yield closed at 2.241% on August 9 down from August 8 close of 2.283%; 30-years closed at 2.817% down from 2.867%

Key Levels:

  • Critical support levels for S&P 500 are 2465.33, 2462.08 and 2459.93
  • Critical resistance levels for S&P 500 are 2475.07, 2483.14 and 2490.87
  • Key levels for eMini futures: break above 2469.00, the high of 2:30 AM and break below 2461.00, the low of 7:00 AM

Pre-Open

  • On Wednesday, at 4:00 PM, S&P future (September contract) closed at 2471.00 and the index closed at 2474.02 – a spread of about 3.00 points; futures closed at 2473.00 for the day; the fair value is -2.00
  • Pre-NYSE session open, futures price action is to the downside – at 8:15 AM, S&P 500 futures were down by -9.25; Dow by -52.00; and NASDAQ by -33.75

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 large green candle with no upper shadow and small lower shadow; whole candle was below Tuesday’s body; a near in-neck candlestick pattern, which, usually, is a continuation of down move
  • 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
  • At 20-day EMA; above 50-day EMA, 100-day and 200-day
  • Confirmed Uptrend
2-Hour (e-mini future)
  • Down break of the a symmetrical triangle stopped near support – 12:00 PM low on July 27; the bounce faced resistance at the broken lower bound of the triangle
  • Sequence of higher highs and higher lows since 6:00 AM on July 28 is still valid
  • Below 20-bar EMA, which is below 50-bar EMA
30-Minute (e-mini future)
  • Declining since 4:00 PM on August 9; near the low before Asian session on August 8
  • Wednesday target still relevant – On Wednesday it declined sharply from high of 2488.50 at 12:00 PM on August 8; 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 mostly lower on Wednesday, August 9. Dow Jones Transportation Average was up. All gapped down at the open and they proceeded to close the gap for the rest of the day. All but Russell 2000 were able close the gap and closed near the high of the day with very small lower shadow.

However, multiple day chart patterns are not as encouraging as the one day candlestick formation. Dow Jones Industrial Average has made a three-day evening star pattern. NASDAQ Composite is at the 10-day low, like S&P 500. Russell 200 is at the June 22 low support. DJT is showing sign that it may resume it down trend that started with July 14 high.

Only three S&P 500 sectors – Consumer Discretionary, Technology and Utility – were down on Wednesday. Finance was unchanged.

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