Morning Notes – Friday August 25, 2017

/ August 25, 2017

Directional Bias For The Day:

  • S&P Futures are higher
  • Moving up since 3:30 AM test of Wednesday’s last hour low of 2437.50
  • Near the upper limit of a horizontal channel; a break above will have target near 2460.00-to-2463.00; strong resistance near 2454.75
  • Odds are for an up day – watch for break below 2444.25 for a change of fortunes
  • Key economic data due:
    • Core Durable Goods Orders (0.5% vs. 0.4% est.) at 8:30 AM
    • Durable Goods Orders (-6.8% vs. -0.6%) at 8:30 AM
    • Fed Reserve Chair Janet Yellen speech at Jackson Hole at 12:00 PM

Markets Around The World

  • Markets in the East closed mostly higher – Sydney was lower; Mumbai was closed
  • European markets are higher
  • Currencies:
    Up Down
    • EUR/USD
    • GBP/USD
    • USD/JPY
    • AUDUSD
    • NZD/USD
    • Dollar index
    • USD/CHF
    • USD/CAD
  • Commodities are mixed
    Up Down
    • Crude Oil
    • Silver
    • Copper
    • Palladium
    • Sugar
    • Coffee
    • Cocoa
    • NatGas
    • Gold
    • Platinum
  • 10-yrs yield closed at 2.194% up from August 23 close of 2.171%; 30-years closed at 2.769% up from 2.749%

Key Levels:

  • Critical support levels for S&P 500 are 2440.55, 2433.67 and 2423.05
  • Critical resistance levels for S&P 500 are 2450.39, 2454.77 and 2465.02
  • Key levels for eMini futures: break above 2449.00, the high of 9:30 AM on August 24 and break below 2444.25, the high of 6:00 PM on August 24

Pre-Open

  • On Thursday, at 4:00 PM, S&P future (September contract) closed at 2437.50 and the index closed at 2438.97 – a spread of about 1.50 points; futures closed at 2440.75 for the day; the fair value is -3.25
  • Pre-NYSE session open, futures price action is to the upside – at 8:15 AM, S&P 500 futures were up by +7.00; Dow by +47.00; and NASDAQ by +24.50

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 bearish engulfing candle that was contained within the large green candle of Tuesday; highs and lows were above and below Wednesday’s levels
  • 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)
  • Futures tested the Wednesday’s low of 2435.25 (near Fibonacci levels) in the early morning trading and the then turned around
  • 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)
  • At the upper limit of a horizontal channel – high of 2447.75 and low of 2435.00
  • 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 mostly lower on Thursday 24 after rising in pre-market trading. Russell 2000 was up.

Dow Jones Industrial Average, S&P 500 and NASDAQ Composite made bearish engulfing candles that were within the real body of Tuesday’s green candle. A break of either extremes will be clue for direction for next few days. Dow Jones Transportation Average is showing signs of break down below recent support.

Only two S&P 500 sectors – Energy and Utility – were positive for the day.

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