Market Diary – Wednesday, May 25, 2016

Directional Bias For The Day: To the upside

Before NYSE Session Open

Yesterday:

All major indices closed up strong and broke out of their respective consolidation pattern to the upside. This bodes quite well for a rally – at least for a while. Resistance levels from the 2015 and 2016 high still loom ahead that may dampen the rally. Other global markets also did well.

Pivot Levels:

S&P 500 closed above 10-D EMA for the first time since May 16th. The 20-D EMA is trending above 50-D EMA since March 9, 2016.

S&P 500

Note: The probability of a level breaking is shown above is for the condition when 1) the price closes above 10-D EMA and 2) 20-D EMA is above 50-D EMA. R2 break probability comes in picture only when R1 is broken. So are the probabilities calculated for R3, S2 and S3.

Asian Session

The Western Hemisphere carried over to the east too. Most of the markets in Asia and Pacific did well but all are not showing similar chart patterns..

• Shanghai Composite declined by -6.58 or -0.23%; It is in bear market territory after a big spike during 2014-2015. At the moment it is consolidating at the bottom or trading range and risks exists of it toppling over a bearish flag to the downside. The critical level for that is 2650. If it rises above 3100 then it may turn the tide.
• Nikkei gained +258.59 or 1.57%; It too spiked in 2015 and then reached bear-territory in early 2016. It has been forming higher high and higher lows since February lows;  the current price pattern could still turn out to be a bear-flag if the index falls below 15470 before rising above 17620
• Sydney’s S&P/ASX broke out with a strong bullish engulfing candlestick of +1.45%;  it is at the neck-line of an un-even Inverse Head-&-&Shoulder pattern; a convincing break above will be bullish with target to 6000 or approximately 15% from the current levels
• South Korea’s Kospi Composite gained +1.18% bust is still in a down-sloping flag on daily timeframe, which is  emerging within a symmetrical triangle on weekly timeframe; Kospi is in a trading range – between 2200 and 1650 – since 2010
• Mumbai rose by +2.28%; it is trying to break a down-trend line from March ’15 high to the upside

Currencies

• Dollar index declined marginal in an uptrend;
• Euro gained slightly in a down trend
• British Pound gained a bit; forming a rounding cup; maintaining an uptrend since February low with higher highs and higher lows
• USD./JPY gained slightly (means Yen declined); trying to regain an uptrend line on 4-hour timeframe, which was broken one Monday May 23rd.
• Emerging market currencies are mixed

Treasury Yields

Yields on 30-years and 10-years treasuries are marginally up pre-NYSE open. Yesterday, yields gained. By closing up yesterday then they completed the morning star candlestick pattern. This is bullish in nature.

Commodities

• WTI Crude is not changed much in an updtrend
• NatGas is trending down; it completed an evening star candlestick formation on daily time-frame. This bearish in nature
• Gold is down but Silver is up; both in strong downtrend
•  Copper making a rounding bottom pattern on 4-hour time frame; On daily time frame it formed a bullish engulfing candlestick pattern which eclipsed a an indecisive doji of Monday