Morning Notes – Monday August 14, 2017

/ August 14, 2017

Directional Bias For The Day:

  • S&P Futures are higher
  • Uptrend since the low of 2430.25 at 7:30 AM on August 11; at 38.6% Fibonacci  retracement
  • Broke above a downtrend line from August 8 high
  • Odds are for an up day – watch for break below 2447.25 for a change of fortunes
  • No Key economic data due

Markets Around The World

  • Markets in the East closed mostly higher; Tokyo was down
  • European markets are up
  • Dollar index, and USD/JPY are up; EUR/USD and GBP/USD are down
  • Commodities are down
  • 10-yrs yield is at 2.220% up from August 11 close of 2.189%; 30-years is at 2.815% up from 2.787%

Key Levels:

  • Critical support levels for S&P 500 are 2437.75, 2429.30 and 2412.79
  • Critical resistance levels for S&P 500 are 2447.08, 2455.05 and 2465.38
  • Key levels for eMini futures: break above 2455.50, the high of 3:30 AM and break below 2447.75, the low of 1:30 AM

Pre-Open

  • On Friday, at 4:00 PM, S&P future (September contract) closed at 2439.75 and the index closed at 2441.32 – a spread of about 1.50 points; futures closed at 2440.00 for the day; the fair value is -0.25
  • Pre-NYSE session open, futures price action is to the upside – at 8:30 AM, S&P 500 futures were up by +13.75; Dow by +100.00; and NASDAQ by +33.25

Directional Bias Before Open

  • Weekly: Up
  • Daily: Up
  • 120-Min: Side-to-Down
  • 30-Min: 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:
  • A large red candle after few weeks doji candles the week ending on August 11
  • Last week’s pivot point 2456.65; R1=2475.54, R2=2509.77; S1=2422.42, S2=2403.53
  • A down week, second in five weeks; fourth 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
  • At 10-week EMA; above 39-week SMA and 89-week SMA
  • Confirmed uptrend, though pulling back
Daily
  • A small red harami within a larger red candle; gave up most of the day’s gain near the end of session
  • Last pattern was down-sloping flag in June; was broken to the upside on July 13; the first target (100%) extension is near 2507.00; pattern will be relevant is futures do not fall below 2430.00
  • Pattern before that was a horizontal channel, resulting in upside break, with a 100% extension target near 2480.00, which was achieved on August 8
  • Below 20-day EMA; at 50-day EMA; above 100-day and 200-day
  • Confirmed Uptrend
2-Hour (e-mini future)
  • Bouncing from Thursday-Friday’s low; broken above a downtrend line from August 8 high;
  • Sequence of lower highs and lower lows since 12:00 PM high on August 8
  • At falling 50-bar EMA, which is above recently rising 20-bar EMA
30-Minute (e-mini future)
  • Bounced up to 38.6% Fibonacci retracement of the decline on Thursday August 10;
  • Higher highs and higher lows since the low of 2434.00 at 7:30 AM n August 11; lower lows and lower highs on a larger scale, since August 8 high
  • Targets from last week’s bearish pattern were achieved
  • Above a rising 20-bar EMA, which is above rising 50-bar EMA

Previous Session

Major U.S. indices closed higher on Friday, August 11 but most made harami candlestick within Thursday’s large red candle. Most indices gave up their gains in the closing hours of the session. NASDAQ Composite and Dow Jones Transportation Average held on to much of their gains. Dow Jones Industrial Average and S&P 500 closed below their respective open.

For the week, the price action of most of the indices was bearish.  S&P 500, DJIA and DJT made bearish engulfing candles. NASDAQ, Russell 2000, NYSE Composite and Wilshire 5000 Total Market Index also made large red candles which reversed past many weeks gains.

Five S&P 500 sectors were up – Consumer Discretionary, Consumer Staples, Industrials, Technology and Healthcare.

 

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