Morning Notes – Thursday August 24, 2017

/ August 24, 2017

Directional Bias For The Day:

  • S&P Futures are higher
  • Moving up since 6:30 PM on August 23
  • Odds are for an up day – watch for break below 2440.00 for a change of fortunes
  • Key economic data due:
    • Unemployment Claims (234K vs. 237K est.) at 8:30 AM
    • Existing Home Sales (est. 5.55M) at 10:00 AM
    • Mortgage Delinquencies at 10:00 AM

Markets Around The World

  • Markets in the East closed mixed – Shanghai and Tokyo closed lower; Hong Kong, Sydney, Mumbai and Seoul closed higher
  • European markets are higher
  • Currencies:
    Up Down
    • Dollar index
    • GBP/USD
    • USD/JPY
    • EUR/USD
    • USD/CHF
    • AUDUSD
    • NZD/USD
    • USD/CAD
  • Commodities are mixed
    Up Down
    • NatGas
    • Copper
    • Platinum
    • Palladium
    • Sugar
    • Cocoa
    • Crude Oil
    • Gold
    • Silver
    • Coffee
  • 10-yrs yield is at 2.185% up from August 23 close of 2.171%; 30-years is at 2.757% up from 2.749%

Key Levels:

  • Critical support levels for S&P 500 are 2441.42, 233.67 and 2423.05
  • Critical resistance levels for S&P 500 are 2448.91, 2454.77 and 2465.02
  • Key levels for eMini futures: break above 2447.75, the high of 11:30 AM on August 23 and break below 2440.00, the low of 4:00 AM

Pre-Open

  • On Wednesday, at 4:00 PM, S&P future (September contract) closed at 2442.75 and the index closed at 2444.04 – a spread of about 1.25 points; futures closed at 2441.50 for the day; the fair value is +1.25
  • Pre-NYSE session open, futures price action is to the upside – at 9:00 AM, S&P 500 futures were up by +5.50; Dow by +54.00; and NASDAQ by +20.25

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 doji harami candle; opened with a gap down and the mostly moved up
  • 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;
  • At 50-day EMA and just below 20-day EMA; bouncing off 100-day SMA; above 200-day SMA
  • Uptrend under pressure
2-Hour (e-mini future)
  • Pulled back from the high 2454.75 to 50% retracement of move up from August 21 low and to 78.6% retracement of move up from August 22 low
  • Lower highs and lower lows since 12:00 PM on August 8; sequence will break with a rise above 2455.00
  • Above flat 20-bar EMA, which just crossed over flat 50-bar EMA
30-Minute (e-mini future)
  • Gradual move up since the low of 2435.25 at 6:30 PM on August 23
  • Higher highs and higher lows since 10:00 AM on August 21
  • Lower lows and lower highs on a larger scale, since August 8 high
  • Above recently rising 20-bar EMA, which is above 50-bar EMA

Previous Session

Major U.S. indices closed lower on Wednesday 23 in a low range day. Most indices made a small harami candle, either doji or with small real body that was either red or green, within Tuesday’s large greed candle. Dow Jones Transportation Average made a relatively large red candle that closed below previous day’s low. The indices opened with a gap down but then, for the rest of the day, most of them generally moved up.

Only three S&P 500 sectors – Energy, Utility and Real Estate – were positive for the day.

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