Morning Notes – Monday August 21, 2017

/ August 21, 2017

Directional Bias For The Day:

  • S&P Futures are little changed
  • Moving in a horizontal channel since 4:00 PM on August 17 – high of 2434.00 and low of 2419.75
  • Odds are for a sideways to an up day – watch for break below 2419.75 for a change of fortunes
  • No Key economic data due:

Markets Around The World

  • Markets in the East closed mostly lower – Shanghai and Hong Kong were up
  • European markets are mixed – U.K. Spain and Switzerland are up; Germany, France, Italy and STOXX 600 are down
  • Dollar index, and USD/JPY are down; EUR/USD and GBP/USD are up
  • Commodities are mostly higher – cotton and cocoa are down
  • 10-yrs yield closed at 2.194% on August 18 down from August 17 close of 2.199%; 30-years closed at 2.777% down from 2.782%

Key Levels:

  • Critical support levels for S&P 500 are 2420.69, 2412.9 and 2407.70
  • Critical resistance levels for S&P 500 are 2440.27, 2453.35 and 2465.02
  • Key levels for eMini futures: break above 2431.50, the high of 7:00 PM on August 20 and break below 2419.75, the low of 3:30 AM

Pre-Open

  • On Friday, at 4:00 PM, S&P future (September contract) closed at 2424.50 and the index closed at 2425.55 – a spread of about 1.00 points; futures closed at 2426.75 for the day; the fair value is -1.25
  • Pre-NYSE session open, futures price action is little changed – at 8:00 AM, S&P 500 futures were up by +0.25; Dow down by -10.00; and NASDAQ down by -13.25

Directional Bias Before Open

  • Weekly: Up
  • Daily: Up-to-Side
  • 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:
  • A large red body candle for the week ending on Friday August 18
  • Last week’s pivot point 2440.39; R1=2460.09, R2=2494.63; S1=2405.85, S2=2386.15
  • A down week – second in a row and third in last 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
  • Below 10-week EMA; above 39-week SMA and 89-week SMA
  • Confirmed uptrend, though pulling back
Daily
  • A small bodied red candle with larger upper shadow and smaller lower shadows that looks like a gravestone doji
  • A bearish ABCD (A=2490.87; B=2437.75; C=2474.93) pattern is underway; the 100% extension is near 2421.81 achieved; 161.8% extension is near 2388.98
  • Last pattern, a down-sloping flag in June that was broken to the upside on July 13, is nullified when price broke below 2430.00;
  • Below 20-day EMA and 50-day EMA; above 100-day and 200-day
  • Uptrend under pressure
2-Hour (e-mini future)
  • Bouncing off the lows but drifting sideways with downward bias since 4:00 PM on August 17
  • Lower highs and lower lows since 12:00 PM high on August 8 with one exception;
  • Below falling 50-bar EMA, which is below falling 20-bar EMA
30-Minute (e-mini future)
  • Made a near double bottom at 2419.50; rising up since 3:00 AM low of 2419.75
  • Lower lows and lower highs on a larger scale, since August 8 high
  • At a flattening 50-bar EMA, which is above 20-bar EMA

Previous Session

Major U.S. indices closed lower on Friday 18. NASDAQ Composite, Russell 2000, S&P 500, NYSE Composite and Wilshire 5000 Total Market Index made doji or near doji candlesticks. NASDAQ and Russell 2000 had real body near the middle of day’s range. S&P 500 made a near gravestone doji.

Four S&P 500 sectors – Energy, Materials, Finance and Utility – were up on Friday. For the week, major indices made a large red candle. Russell 2000 declined 1.2% and Dow Jones Transportation Average declined 1.1%. One four S&P sectors – Consumer Staples, Materials, Utility and Real Estate – were up for the week.

 

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