Morning Notes – Tuesday August 22, 2017

/ August 22, 2017

Directional Bias For The Day:

  • S&P Futures are higher
  • Moving higher since 10:00 AM on August 21
  • Near the upper limit of a horizontal channel since 4:00 PM on August 17 – high of 2434.00 and low of 2419.75
  • Odds are for an up day – watch for break below 2421.75 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 mostly higher – Italy is down
  • Dollar index, and USD/JPY are up; EUR/USD and GBP/USD are down
  • Commodities are mixed – crude oil is unchanged; NatGas and Copper are higher; gold, silver, sugar cotton and cocoa are down
  • 10-yrs yield closed at 2.180% on August 21 down from August 18 close of 2.194%; 30-years closed at 2.763% down from 2.777%

Key Levels:

  • Critical support levels for S&P 500 are 2417.35, 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 2437.25, the high of 3:00 AM and break below 2421.75, the low of 3:00 PM on August 21

Pre-Open

  • On Monday, at 4:00 PM, S&P future (September contract) closed at 2426.75 and the index closed at 2428.37 – a spread of about 1.50 points; futures closed at 2428.00 for the day; the fair value is -1.25
  • Pre-NYSE session open, futures price action is to the upside – at 7:30 AM, S&P 500 futures were up by +4.25; Dow by +37.00; and NASDAQ by +23.00

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 green candle with larger lower shadow and smaller upper shadows
  • 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; need a break above 2465.02 to nullify the pattern
  • 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; bouncing off 100-day SMA; above 200-day SMA
  • Uptrend under pressure
2-Hour (e-mini future)
  • Bounce off the lows continues; a test of the lows (a break below it) at 1:00 AM on August 21
  • Lower highs and lower lows since 12:00 PM on August 8
  • Above recently rising 20-bar EMA, which is below falling 50-bar EMA
30-Minute (e-mini future)
  • Made a double bottom at 10:00 AM after a brief break below 2419.50, the low of 9:30 AM on August 18; made a Wyckoff Spring pattern
  • Lower lows and lower highs on a larger scale, since August 8 high
  • At/above a flattening 50-bar EMA, which is below 20-bar EMA

Previous Session

Major U.S. indices closed mixed on Monday 21 and fluctuating between red and green for most of the day. NASDAQ Composite and Russell 2000 closed down. Dow Jones Industrial Average, S&P 500, Dow Jones Transportation Average, NYSE Composite and Wilshire 5000 Total Market Index closed higher. The day’s range was small and most indices made doji or doji like candles.

Three S&P 500 sectors – Energy, Finance and Technology – were down on Monday.

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