Morning Notes – Tuesday January 30, 2018

/ January 30, 2018

Directional Bias For The Day:

  • S&P Futures are down and moving down since 5:00 AM
  • An up-sloping flag on 6-minute chart is broken to the downside but there is a support at 2831.00, a break below it would be quite bearish
  • Odds are for down day; good chance of increased volatility – watch for break above 2845.75 for change of fortunes
  • Key economic data due:
    • CB Consumer Confidence (est. 123.2) at 10:00 AM

Markets Around The World

  • Markets in the East closed down – relatively large declines
  • European markets are down – relatively large declines
  • Currencies:
    Up Down
    • EUR/USD
    • GBP/USD
    • AUD/USD
    • NZD/USD
    • Dollar index
    • USD/JPY
    • USD/CHF
    • USD/CAD
  • Commodities:
    Up Down
    • Gold
    • Silver
    • Copper
    • Sugar
    • Cocoa
    • Crude Oil
    • NatGas
    • Platinum
    • Palladium
    • Coffee
    • Cotton
  • Bonds
    • 10-yrs yield is at 2.711% up from January 29 close of 2.696%;
    • 30-years is at 2.963% up from 2.941%
    • 2-years yield is at 2.120% down from 2.124%
    • The 10-Year-&-2-Year spread is at 0.591 up from 0.572

Key Levels:

  • Critical support levels for S&P 500 are 2846.18, 2830.94 and 2824.81
  • Critical resistance levels for S&P 500 are 2867.45, 2872.09 and  2884.75
  • Key levels for eMini futures: break above 2845.75, the high of 5:00 AM and break below 2831.00, the low of 11:00 PM on January 29

Pre-Open

  • On Monday, at 4:00 PM, S&P future (March contract) closed at 2853.00 and the index closed at 2853.53 – a spread of about -0.50 points; futures closed at 2853.50 for the day; the fair value is -0.50
  • Pre-NYSE session open, futures price action is to the downside – at 8:45 AM, S&P 500 futures were down by -17.50; Dow by -247.00; and NASDAQ by -47.50

Directional Bias Before Open

  • Weekly: Up
  • Daily: Up
  • 120-Min: Up-Side
  • 30-Min: Side-Down
  • 15-Min: Down
  • 6-Min: Down

The trend and patterns on various time frames for S&P 500 are:

Monthly
  • Confirmed Uptrend
  • December 2017 closed higher; index has been higher for the nine straight months; it has only one down month, March 2017, since October 2016
  • Uptrend resumption since Feb 08, 2016 after a pull back of -15.2%
Weekly:
  • The week ending on January 26 was a large body green candle, with almost no upper and lower shadows
  • Last week’s pivot point 2851.29 R1=28294.45 R2=2916.04; S1=2829.70, S2=2786.54; R1/R2/R3 were breached;
  • An up week;  fourth in last five weeks and ninth 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 near 2687.41 is achieved; the 100% extension target is near 2913.13
  • 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 near 2704.63 is achieved; the 261.8% extension target is near 3088.34
  • 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
  • Confirmed Uptrend
  • Last big pattern, a down-sloping flag in June 2017, was broken to the upside on July 13, 2017; in August the index declined and tested the broken upper limit of the flag; since then the index has made three very small flags; it broke to the upside of the last flag on January 2
  • Above 20-day EMA but above 50-day EMA; Above 100-day SMA and 200-day SMA
2-Hour (e-mini future)
  • Back to the lower limit of a horizontal channel that it broke above on January 26, after reach the 100% extension target; a break below 2833 may open the target in 2790’s
  • RSI-9 divergence that was in the making since January 24; RSI at the lowest level since December 29; higher probability of continued weakness till RSI reaches above 65
  • Sequence of higher highs and higher lows since 10:00 AM on November 2 and since August 29 with few exceptions; again under pressure
  • Below 50-bar EMA, which is at EMA10 of EMA50
  • Bias: Up-Side
30-Minute (e-mini future)
  • Below a down trend line from the highs; forming an up-sloping flag, which broke to the down side in a sideways move
  • Last pattern bullish ABCD or symmetric triangle broke to the upside on January 22; 261.8% extension target near 2867.50 is achieved
  • RSI-14 is declining since 9:00 PM on January 28; bounced off just above 20 and the downtrend line on it broke, which increases the chance of downtrend on price to be broken unless RSI falls below the lows reached during Asian session
  • Below 20-bar EMA which is below 50-bar EMA
  • Bias: Side-Down
15-Minute (e-mini future)
  • Bollinger Band (20, 2.0) is sloping down since 8:45 PM on January 28; bouncing up since 3:00 AM
  • The band expanded during the Asian session but is contracting, relatively, from 3:15 AM
  • The Stochastic (9, 1, 3): %K is below 20
  • Bias: Down

Previous Session

Major U.S. indices closed lower on Monday January 29. Large cap indices made red harami pattern within a large green candle. Dow Jones Transportation Average made a shooting star candle and Russell 2000 made a bearish engulfing. A break below Monday’s low will be bearish.

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

 

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