Morning Notes – Thursday August 17, 2017

/ August 17, 2017

Directional Bias For The Day:

  • S&P Futures are lower
  • Moving lower since 12:00 PM on August 16 with anew leg down at 3:00 AM
  • Odds are for a down day – watch for break below 2468.50 for a change of fortunes
  • Key economic data due:
    • Unemployment Claims (232K vs. 240K est.) at 8:30 AM
    • Philly Fed Manufacturing Index (18.9 vs. 18.3 est.)
    • Capacity Utilization Rate (est. 0.3%) at 9:15 AM
    • Industrial Production (est. 76.7%) at 9:15 AM

Markets Around The World

  • Markets in the East closed mixed – Shanghai, Mumbai and Seoul were up; Hong Kong, Tokyo and Sydney were down
  • European markets are lower
  • Dollar index, and USD/JPY are up; EUR/USD and GBP/USD are down
  • Commodities are mixed – crude oil, NatGas and copper are lower; gold and silver are up
  • 10-yrs yield closed at 2.226% on August 16 down from August 15 close of 2.266%; 30-years closed at 2.808% down from 2.841%

Key Levels:

  • Critical support levels for S&P 500 are 2463.86, 2454.96 and 2448.09
  • Critical resistance levels for S&P 500 are 2474.93, 2483.45 and 2490.87
  • Key levels for eMini futures: break above 2465.25, the high of 6:30 AM and break below 2460.00, the low of 10:30 AM on August 15

Pre-Open

  • On Wednesday, at 4:00 PM, S&P future (September contract) closed at 2467.25 and the index closed at 2468.11 – a spread of about 1.00 points; futures closed at 2467.50 for the day; the fair value is -0.25
  • Pre-NYSE session open, futures price action is to the downside – at 8:15 AM, S&P 500 futures were down by -8.00; Dow by -55.00; and NASDAQ by -31.50

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 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 doji candle with small upper and lower shadows
  • 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
  • At 20-day EMA; at 50-day EMA; above 100-day and 200-day
  • Confirmed Uptrend
2-Hour (e-mini future)
  • Sideways move since 12:00 PM on August 14 within a horizontal channel with high of 2474.00 and low of 2460;
  • Pulling back to lower bound of the horizontal channel from the upper bound
  • Sequence of lower highs and lower lows since 12:00 PM high on August 8 with one exception; break above 2474.00 will nullify it
  • At or below flattening 50-bar EMA, which is below flattening 20-bar EMA
30-Minute (e-mini future)
  • Below a downtrend line from 2474.00, the high at 12:00 PM on August 16
  • Higher highs and higher lows since the low of 2434.00 at 7:30 AM on August 11; a break below 2460.00 will nullify it
  • Lower lows and lower highs on a larger scale, since August 8 high
  • Below a flat 20-bar EMA, which is below flat 50-bar EMA

Previous Session

Major U.S. indices closed higher on Wednesday, August 16. The markets reached intra-day high by mid-day and then gradually drifted lower. The day’s range ws small and most indices closed near the lows of the day.

Only two S&P 500 sectors – Energy and Finance – were down on Wednesday.

 

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