Morning Notes – Tuesday July 31, 2018

/ July 31, 2018

Directional Bias For The Day:

  • S&P Futures are higher; moving up from a low of 2798.25 since 12:30 PM on July 30; near a resistance level
  • Odds are for a sideways to up day, with high volatility – watch for break above 2811.75 and below 2804.75 for clarity
  • Key economic data due:
    • Core PCE Price Index (0.1% vs. 0.1% est.) at 8:30 AM
    • Employment Cost Index (0.6% vs. 0.7% est.) at 8:30 Am
    • Personal Spending (0.4% vs. 0.4% est.) at 8:30 AM

Markets Around The World

  • Markets in the East closed mostly higher – Hong Kong was down
  • European markets are mostly higher – Germany is lower
  • Currencies:
    Up Down
    • EUR/USD
    • GBP/USD
    • USD/JPY
    • AUD/USD
    • USD/CAD
    • Dollar index
    • USD/CHF
    • NZD/USD
    • USD/INR
  • Commodities:
    Up Down
    • Gold
    • Platinum
    • Palladium
    • Cotton
    • Cocoa
    • Crude Oil
    • NatGas
    • Silver
    • Copper
    • Sugar
    • Coffee
  • Bonds
    • 10-yrs yield is at 2.958%, down from July 30 close of 2.975%;
    • 30-years is at 3.081%, down from 3.106%
    • 2-years yield is at 2.690%, up from 2.666%
    • The 10-Year-&-2-Year spread is at 0.268, down from 0.309

Key Levels:

  • Critical support levels for S&P 500 are 2798.11, 2795.14 and 2789.24
  • Critical resistance levels for S&P 500 are 2810.55, 2821.74 and 2825.33
  • Key levels for eMini futures: break above 2811.50, the high of 7:30 AM and break below 2804.75, the low of 4:00 AM

Pre-Open

  • On Monday, at 4:00 PM, S&P future (September contract) closed at 2804.00 and the index closed at 2802.60 – a spread of about +1.5 points; futures closed at 2803.25 for the day; the fair value is +0.75
  • Pre-NYSE session open, futures price action is to the upside – at 8:15 AM, S&P 500 futures were up by +7.25; Dow by +25.00; and NASDAQ by +26.00

Directional Bias Before Open

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

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 July 20 was a green candle that broke above a doji candle of previous week; the real body smaller than the upper shadow
  • Last week’s pivot point=2820.66, R1=2846.19, R2=2873.55; S1=2793.30, S2=2767.77; R1/R2/R3 pivot levels were breached;
  • A fourth up week in a row; fourth in last five weeks and eight in last ten weeks
  • Broke above an ascending triangle but retraced back to its upper limit; 100% extension target is near 3070.00 level
  • 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; Last swing high, 2872.87, was during the week of January 22, 2-018; the low since the last swing high is 2532.69 during the week if February 5, 2018
  • Above 10-week EMA; above 39-week SMA and above 89-week SMA
  • Uptrend resumed
Daily
  • A relatively large red candle following a bearish engulfing candle, which had engulfed a harami-doji; small lower shadow and smaller upper shadow
  • Above previous swing low
  • %K is below %D after making a bearish divergence
  • At/above 20-day EMA; above 50-day EMA, 100-day SMA and 200-day SMA
  • Uptrend
2-Hour (e-mini future)
  • Downtrend since July 25 2:00 PM high of 2849.50; broke below an upsloping flag at 8:00 AM on July 27; broke above a downtrend line
  • RSI-9 moving up from a low of 15.16 at 12:00 AM on July 30; made a bullish divergence at 2:00 PM on July 30
  • Below 20-bar EMA, which is below EMA10 of EMA50
  • Bias: Side
30-Minute (e-mini future)
  • Broke below a support zone or lower limit of a horizontal channel near 2833.00 at 10:00 AM on Julye 27; achieved 200% extension target near 2800.00
  • RSI-9 rising form a low of 13.37 at 12:30 PM on July 27; made a bullish engulfing at 12:30 PM on July 30; above 40 since 4:30 PM on July 30
  • Above 50-bar EMA, which is above 20-bar EMA
  • Bias: Down-Side
15-Minute (e-mini future)
  • Bollinger Band (20, 2.0) is moving sideways with an up bias 6:00 PM on July 30
  • The band was narrow from 10:00 PM to 6:00 AM; expanding since then with price moving along the upper band
  • RSI between 40 and 65 since 4:30 PM on July 30; near 65 since 6:45 AM
  • The Stochastic (9, 1, 3): %K crossed below %D above 80 at 6:45 AM and made a bearish divergence at 7:45 AM
  • Bias: Side

Previous Session

Major U.S. indices closed lower on Monday July 30. The volume was lower for most except for NASDAQ Composite. NASAQ and Russell 2000 are leading the market down. Dow Jones Transportation Average is performing better than other followed by NYSE Composite.

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

 

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