Morning Notes – Tuesday December 5, 2017

/ December 5, 2017

Directional Bias For The Day:

  • S&P Futures are higher
  • Drifting up since the low of 2633.75 at 4:30 PM on Monday; the 38.2% Fibonacci retracement is near 2645.75 and 50% near 2649.25
  • Odds are for a sideways to down day – watch for break above 2645.50 and 2649.25
  • Key economic data due:
    • Trade Balance (-48.7B vs. -46.2B est.) at 8:30 AM
    • ISM Non-Manufacturing PMI (est. 59.2) at 10:00 AM

Markets Around The World

  • Markets in the East closed mostly down – Seoul was up
  • European markets are mixed – U.K., Spain and Italy are up; Germany, France, Switzerland and STOXX-600 are down
  • Currencies:
    Up Down
    • Dollar index
    • USD/JPY
    • USD/CHF
    • AUD/USD
    • NZD/USD
    • USD/CAD
    • EUR/USD
    • GBP/USD
  • Commodities:
    Up Down
    • Crude Oil
    • NatGas
    • Gold
    • Silver
    • Copper
    • Platinum
    • Palladium
    • Sugar
    • Coffee
    • Cotton
    • Cocoa
  • 10-yrs yield is at 2.365% down from December 4 close of 2.379%; 30-years is at 2.734% down from 2.769%

Key Levels:

  • Critical support levels for S&P 500 are 2633.93, 2623,72 and 2605.52
  • Critical resistance levels for S&P 500 are 2657.48, 2665.19 and 2674.95
  • Key levels for eMini futures: break above 2644.50, the high of 12:00 AM and break below 2635.25, the low of 5:30 AM

Pre-Open

  • On Monday, at 4:00 PM, S&P future (December contract) closed at 2638.50 and the index closed at 2639.44 – a spread of about 1.00 points; futures closed at 2638.25 for the day; the fair value is +0.25
  • Pre-NYSE session open, futures price action is mixed – at 7:30 AM, S&P 500 futures were up by +2.50; Dow by +54.00; and NASDAQ down by -13.75

Directional Bias Before Open

  • Weekly: Up
  • Daily: Up
  • 120-Min: Up
  • 30-Min: Side-to-Down
  • 15-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:
  • The week ending on December 1 was a large green candle with almost no lower shadow and a small upper shadow
  • Last week’s pivot point 2632.94; R1=2667.02, R2=2691.81; S1=2608.15, S2=2574.07; R1/R2/R3 were breached
  • An up week;  second in last five weeks and eight in last ten weeks
  • Broke above a down sloping flag on April 24 2017;
    • flag-low was 2322.25 during 27-Mar-17 week; shorter flag-pole length is 317.19 and longer flag-pole length is 590.88;
    • 100% extension target of shorter flag-pole near 2639.41 is achieved; and the 161.8% extension target is near 2835.46
    • 61.8% extension target of longer flag-pole is near 2687.41
  • Broke above a down-sloping flag on November 14, 2016;
    • the flag low was 2083.79 during 31-Oct-16 week; the shorter flag-pole length is 202.13 and the longer flag-pole length is 383.71;
    • 261.8% extension target of shorter flag-pole near 2612.97 is achieved
    • the 161.8% extension target of longer flag-pole is near 2704.63
  • Last swing low, 2322.25, was the low on March 27, 2017
  • Above 10-week EM; above 39-week SMA and 89-week SMA
  • Confirmed uptrend
Daily
  • A large red bodied candle with no lower shadow and small upper shadow; bearish engulfing candle
  • RSI-14 divergence – on October 20 the RSI was 79.65 and the 2578,29, on November 8 the high was 2595.47 and the RSI was 72.50; on November 30, RSI-14 was 76.67 and the index was at 2657.74
  • Last pattern, a down-sloping flag in June that was broken to the upside on July 13; in August the index declined and tested the broken upper limit of the flag
  • Above 20-day EMA but above 50-day EMA; Above 100-day SMA and 200-day SMA
  • Pivot Point=2648.79; R1=2658.56, R2=2674.95; S1=2632.40; S2=2622.63; R1 was breached
  • Confirmed Uptrend
2-Hour (e-mini future)
  • Drifting down after making a high of 2665.25 at 8:00 AM on December 4; made a low of 2633.75 at 4:00 PM on December 4 and is trying to bounce; the 38.2% Fibonacci retracement is near 2645.75 and is acting a s a resistance
  • 14-bar RSI continues to flash divergence – on November 21 the future was at 2600.50 and the RSI was at 75.8, on Sunday the future was at 2603.50 and the RSI at 64.47; on December 4 the RSI-14 was 66.12 and the price was at 2665.25
  • Sequence of higher highs and higher lows since 10:00 AM on November 2 and since August 29 with few exceptions is reasserted on November 21
  • At flattening 50-bar EMA, which is below falling 20-bar EMA
30-Minute (e-mini future)
  • Fell below a horizontal channel at the high; achieved 161.8% retracement of the height of the channel
  • Made a low near 2633.75 and bounced up to 2644.50, near 38.2% Fibonacci retracement; the 50% Fib level is near 264.25
  • At of below flattening 20-bar EMA, which is below flattening 50-bar EMA
15-Minute (e-mini future)
  • Envelop and Bollinger Band are mostly moving side ways with a down bias since 10:00 PM on December 4
  • The Bollinger Band contracted from midnight to 4:00 AM and is now expanding
  • The Stochastic (9, 1, 3) reached 80.6 at 7:00 AM and is turning down
  • At 20-bar EMA, which is below 50-bar EMA

Previous Session

Major U.S. indices closed mixed on Monday December 4. S&P 500, NASDAQ Composite, Russell 2000 and Wilshire 5000 Total Market Index closed down. Dow Jones Industrial Average, Dow Jones Transportation average and NYSE Composite closed up. All except NASDAQ made all time high but then closed much lower than the highs. DJT was the only index to closed above the open. S&P 500, NASDAQ and Wilshire made bearish engulfing candles.

  • S&P 500 Sectors
Up Down
  1. Consumer Discretionary
  2. Consumer Staples
  3. Materials
  4. Industrials
  5. Finance
  1. Energy
  2. Technology
  3. Utility
  4. Heath Care
  5. Real Estate

 

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